Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/187556
Authors: 
Chen, Yunsen
Zhu, Song
Wang, Yutao
Year of Publication: 
2011
Citation: 
[Journal:] China Journal of Accounting Research [ISSN:] 1755-3091 [Volume:] 4 [Year:] 2011 [Issue:] 3 [Pages:] 155-165
Abstract: 
Receiving punishment from regulators for corporate fraud can affect financing contracts between a firm and its bank, as both the firm's credit risk and information risk increase after punishment. By focusing on Chinese firms' borrowing behavior after events of corporate fraud, we find that firms' bank loans after punishment are not only significantly lower, but are also less than those for non-fraudulent firms. In addition, loan interest rates after punishment are not only higher than before, but also higher than those for their non-fraudulent counterparts. In addition, we find that corporate fraud indirectly destabilizes the 'performance-bank loan' relationship. Our results suggest that corporate fraud negatively affects a firm's ability to source debt financing, which provides new evidence about the economic consequences of fraud.
Subjects: 
Corporate fraud
Bank loans
Credit risk
Information risk
China
JEL: 
G32
G21
G38
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/3.0/
Document Type: 
Article

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