Journal article 54 views 12 downloads
Government debt and stock price crash risk: International Evidence
Journal of Financial Stability, Volume: 72, Start page: 101245
Swansea University Author:
Sabri Boubaker
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Crown Copyright © 2024. This is an open access article under the CC BY license.
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DOI (Published version): 10.1016/j.jfs.2024.101245
Abstract
We add to the literature on the economic outcomes of government debt and argue that government debt increases crash risk via two channels: (i) hoarding bad news and (ii) tax avoidance. Based on a large international sample, our results indicate that stock crash risk is positively associated with gov...
| Published in: | Journal of Financial Stability |
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| ISSN: | 1572-3089 |
| Published: |
Elsevier BV
2024
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| Online Access: |
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| URI: | https://cronfa.swan.ac.uk/Record/cronfa67520 |
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| Abstract: |
We add to the literature on the economic outcomes of government debt and argue that government debt increases crash risk via two channels: (i) hoarding bad news and (ii) tax avoidance. Based on a large international sample, our results indicate that stock crash risk is positively associated with government debt. Our conclusions are robust when we treat endogeneity issues, and our tests confirm the validity of bad news hoarding and tax avoidance as channels through which government debt influences stock price crash risk. |
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| Keywords: |
Government debt; Fiscal policy uncertainty; Bad news hoarding; Tax avoidance; Crash risk |
| College: |
Faculty of Humanities and Social Sciences |
| Funders: |
Hamdi Bennasr would like to acknowledge financial support from Qatar University through the grant ID: QUST-1-CBE-2023-965. |
| Start Page: |
101245 |