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Government debt and stock price crash risk: International Evidence

journal contribution
submitted on 2024-03-21, 06:01 and posted on 2024-03-21, 06:01 authored by Hamdi Ben-Nasr, Sabri Boubaker

We add to the literature on the economic outcomes of government debt and argue that government debt increases crash risk via two channels: (i) hoarding bad news and (ii) tax avoidance. Based on a large international sample, our results indicate that stock crash risk is positively associated with government debt. Our conclusions are robust when we treat endogeneity issues, and our tests confirm the validity of bad news hoarding and tax avoidance as channels through which government debt influences stock price crash risk.

Other Information

Published in: Journal of Financial Stability
License: http://creativecommons.org/licenses/by/4.0/
See article on publisher's website: https://dx.doi.org/10.1016/j.jfs.2024.101245

Funding

Open Access funding provided by the Qatar National Library.

History

Language

  • English

Publisher

Elsevier

Publication Year

  • 2024

License statement

This Item is licensed under the Creative Commons Attribution 4.0 International License.

Institution affiliated with

  • Qatar University
  • College of Business and Economics - QU

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