journal article Nov 10, 2016

Corporate Scandals and Household Stock Market Participation

The Journal of Finance Vol. 71 No. 6 pp. 2591-2636 · Wiley
View at Publisher Save 10.1111/jofi.12399
Abstract
ABSTRACTWe show that, after the revelation of corporate fraud in a state, household stock market participation in that state decreases. Households decrease holdings in fraudulent as well as nonfraudulent firms, even if they do not hold stocks in fraudulent firms. Within a state, households with more lifetime experience of corporate fraud hold less equity. Following the exogenous increase in fraud revelation due to Arthur Andersen's demise, states with more Arthur Andersen clients experience a larger decrease in stock market participation. We provide evidence that the documented effect is likely to reflect a loss of trust in the stock market.
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Citations
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References
Details
Published
Nov 10, 2016
Vol/Issue
71(6)
Pages
2591-2636
License
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Cite This Article
Mariassunta Giannetti, Tracy Yue Wang (2016). Corporate Scandals and Household Stock Market Participation. The Journal of Finance, 71(6), 2591-2636. https://doi.org/10.1111/jofi.12399
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