Distance Matters : Evidence from Firm’s Financial Misconduct

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)12_Chapter in an edited book (Author)peer-review

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Author(s)

  • Haoyu Gao
  • Ruixiang Jiang
  • Wei Liu
  • Junbo Wang
  • Chunchi Wu

Related Research Unit(s)

Detail(s)

Original languageEnglish
Title of host publicationAdvances in Pacific Basin Business, Economics and Finance
EditorsCheng-Few Lee, Min-Teh Yu
Pages1-26
Volume11
ISBN (Electronic)978-1-80382-401-7
Publication statusPublished - 2023

Publication series

NameAdvances in Pacific Basin Business, Economics and Finance
PublisherEmerald Publishing Limited
ISSN (Print)2514-4650

Abstract

This chapter investigates the effect of the geographical distance between institutional investors and firms on managers' financial misconduct. The evidence shows that the likelihood of committing financial misconduct by management is positively associated with distance. The distance effect is more prominent for firms with higher information asymmetry and more dedicated institutional investors. In line with the balance between risk-taking and benefit extraction from misconduct, the severity of financial misconduct is higher for firms closer to their institutional investors. Results show that geographical proximity can significantly reduce the cost of information production and facilitate monitoring through access to soft information.

Citation Format(s)

Distance Matters: Evidence from Firm’s Financial Misconduct. / Gao, Haoyu; Jiang, Ruixiang; Liu, Wei et al.
Advances in Pacific Basin Business, Economics and Finance. ed. / Cheng-Few Lee; Min-Teh Yu. Vol. 11 2023. p. 1-26 (Advances in Pacific Basin Business, Economics and Finance).

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)12_Chapter in an edited book (Author)peer-review