Corporate Scandals and Household Stock Market Participation

• 成果类型: Article
• 署名作者: Giannetti, Mariassunta; Wang, Tracy Yue
• 署名单位: Stockholm School of Economics; University of Minnesota System; University of Minnesota Twin Cities
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12399
• 发表日期: 2016
• 页码: 2591-2636
• 关键词: individual investors; Betrayal aversion; risk-aversion; Local bias; WEALTH; FRAUD; CONSEQUENCES; INFORMATION; INVESTMENT; returns

摘要

We 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.