Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 26, 2020 erstellt
Description:
We evaluate the financial risk and explore potential motivation of pervasive external guarantee activities. Using a sample of Chinese A-share listed firms during the period from 2008 to 2017, we find a positive association between external guarantees intensity and stock price crash risk. High repayment obligations and weak guarantee relationship amplify the crash risk. The positive association is more pronounced in firms with low business trust, binding financial constraints, and severe information asymmetry. Nevertheless, external guarantees strengthen bank-firm relationship with higher probability of bank loan approval and reduce dependence on related-party transactions. Our findings are consistent with the notion that listed firms are motivated by promoting access to bank loans through external guarantees at the cost of shareholders with potential crash risk