Recent sociological research suggests that culturally tight environments enforce strong social penalties for mistakes. I find that such culturally tight environments incentivize managers to suppress negative information, increasing stock price crash risk. Opaque financial disclosure is a channel through which cultural tightness affects managerial bad news hoarding. Labor and capital market pressures strengthen the positive effect of cultural tightness on crash risk. The instrumental regressions using labor-intensive agriculture and ethnic homogeneity as instruments confirm a positive tightness-crash relationship. Finally, changes in environments because of headquarters relocations affect managerial tendencies to withhold bad news, resulting in changes in crash risk levels.

This study examines how short-sale constraints affect investors’ information acquisition and thereby shape stock price efficiency. By exploiting two settings that relax short-sale constraints in the US and China, respectively, we find that the removal of short-sale constraints increases investors’ information acquisition in both markets, but the effect is more prompt in China. Investors acquire value-relevant information, especially bad news, and improve their short-selling decisions in both markets. Lastly, information acquisition induced by the removal of short-sale constraints improves price efficiency. Our evidence shows that a reduction in trading frictions promotes information acquisition and improves price efficiency.

This study examines how short-sale constraints affect investors’ information acquisition and thereby shape stock price efficiency. By exploiting two settings that relax short-sale constraints in the US and China, respectively, we find that the removal of short-sale constraints increases investors’ information acquisition in both markets, but the effect is more prompt in China. Investors acquire value-relevant information, especially bad news, and improve their short-selling decisions in both markets. Lastly, information acquisition induced by the removal of short-sale constraints improves price efficiency. Our evidence shows that a reduction in trading frictions promotes information acquisition and improves price efficiency.

Combining daily personnel records of an unlisted manufacturer with stock market data, we find that market overnight returns negatively predicts same-day worker output. The effect is greater on Mondays and extreme overnights. Analysis suggests that the stock market attracts (discourages) public attention when the overnight returns are extremely positive (negative), consistent with humans’ natural tendency of incorporating good news while discounting bad news. As a result, employees at work are disproportionally distracted by positive overnight returns, leading to reduced output. Additional evidence suggests that our results can hardly be explained with alternative distraction events or workers’ stock wealth concerns. This study reveals a novel channel through which the financial market shapes labor supply.

This study investigates the effect of financial technology (FinTech) development on stock price crash risk. We show that the development of FinTech can inhibit management from deliberately hiding bad news and alleviate information asymmetry, thereby reducing stock price crash risk. This effect is more pronounced among non-state-owned enterprises, firms with poor information environments and low-quality internal controls, and those in competitive industries and regions with high marketization. Overall, these findings suggest that the development of FinTech can mitigate the deliberate concealment of bad news by management and improve the timeliness of disclosure, leading to lower risks faced by investors.

We find that the asymmetric volatility phenomenon is reversed in the Shanghai Stock Exchange during bull markets. That is, volatility increases more with good news than with bad news. This evidence is inconsistent with the US markets (Wu 2001, and Bae, Kim and Nelson 2007). Further examination of this phenomenon reveals that the positive impact of good news on volatility is driven by return chasing behaviour of investors in large stocks during bull markets. We also find that volatility increases after stock price declines in bear markets especially for small stocks. This increase in volatility of small stocks after bad news in bear markets is partly driven by liquidity. After controlling for liquidity shifts, there are no significant patterns in the volatility of small stocks during bear markets. We posit that institutional and behavioural factors are the major driving forces of observed volatility patterns in Chinese stock market.

In this paper we argue that ine? cient bank loans can reduce the value of borrowing ?rms when the expropriation of minority share- holders by controlling shareholders is a major concern. Using data from Chinese ?nancial market, we ?nd that bank loan announcements generate signi?cantly negative abnormal returns to borrowing ?rms. The share devaluation following loan announcements are concentrated in ?rms that are perceived to be more vulnerable to controlling share- holders?expropriation. In addition, we ?nd weak evidence that bank quality mitigates the negative market reactions.

In this paper, the relationship between firm performance’s combinations and differences as well as the timeliness of actual and scheduled third-quarter report disclosures is examined by regressing on data extracted from the semi-annual and the third-quarter reports of Chinese listed companies between 2003 and 2004. After controlling for the possible impact of semi-annual report disclosures, stock exchanges, firm size, ratios of tradable A-shares and B-shares, and so on, the results indicate that managers of listed companies may have the incentive to manipulate information in the actual and scheduled third-quarter report disclosures; the rule of “releasing good news earlier than bad news” is thus not strictly complied with. This paper further indicates that a firm’s performance, its combinations and differences, have a significant impact on the timeliness of disclosures of these two reports. I therefore suggest minimising the probability of information manipulation of listed companies, boosting investor relation management to safeguard the rights of small and medium shareholders, and enhancing the timeliness of information disclosures of Chinese listed companies.