Influence of institutional differences on trade credit use during pandemics

Zhang, Cheng; Lee, Yun-Chi; Ho, Kung‐Cheng; Shen, Xixi

doi:10.1016/j.pacfin.2022.101928

Cited by 5 publications

(1 citation statement)

References 72 publications

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“…In the case of COVID‐19, most of the literature examined the impact of a pandemic on the financial stability of a single country/region using less than 3 years of microdata (Cicchiello et al, 2022; Elnahass et al, 2021), while this study calculates the probability of firm default in 43 countries or regions around the world from a micro perspective using the option value method proposed by Merton (1974) and the conditional probability of default proposed by Lee et al (2011). Following Wang et al (2013), this article measures the level of pandemic crisis in each country or region based on the frequency of exposure to the five post‐war epidemic crises SARS (2003), H1N1 (2009), MERS (2012), Ebola (2014), and Zika (2016) identified by Jamison (2018) Disease Control Priorities and Zheng et al (2023). The results of this article provide significant evidence that firms operating in a country that suffers from a higher frequency of pandemic crises are more likely to default.…”

Section: Introductionmentioning

confidence: 99%

Modern pandemic crises and default risk: Worldwide evidence

Huang

Pan

et al. 2023

Financ Manag Account

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This article examines the relationship between modern health pandemic crises and financial stability. Specifically, it collects data on 250,223 firms in 43 countries (or regions) during five modern pandemic crises, SARS (2003), H1N1 (2009), MERS (2012), Ebola (2014), and Zika (2016), and finds that pandemic crises significantly increase the default risk of enterprises. Further analysis shows that formal and informal institutions acted as a “cushion” against the pandemic crisis. The earlier a country adopts IFRS, the more unimpeded access to information, and the more stable religious and ethnic relations within the country can reduce the negative impact of a pandemic on financial stability. This article addresses the hitherto inadequacy of COVID‐related data. In addition, this article argues that governments should build sound state institutions to withstand macroeconomic shocks and highlights the heterogeneity of default risk for enterprises operating in countries with different institutions.

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Section: Introductionmentioning

confidence: 99%

Modern pandemic crises and default risk: Worldwide evidence

Huang

Pan

et al. 2023

Financ Manag Account

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How languages differ: Evidence from firm‐level stock price crash risk in 36 countries

2023

Int. J Fin Econ

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Speakers of weak future time reference (FTR) languages (e.g., Chinese) do not need to grammatically mark future events, whereas speakers of strong FTR languages (e.g., English) do. We conjectured that weak FTR languages lead speakers to hold less precise beliefs about timing and, hence, are associated with higher stock price crash risk. Accordingly, using a comprehensive sample of firms in 36 countries (regions) with 221,414 observations from 1988 to 2017, we found that stock price crash risk was significantly higher in regions dominated by speakers of weak FTR languages. Furthermore, the effect of FTR on stock price crash risk was weakened in countries with stronger formal and informal institutions (e.g., high disclosure quality, greater transparency, and less corruption). Our results gave a new explanation for the heterogeneity in stock price crash risk, provided insights into whether language is an economic institution, and added to the research on the effects of languages on economic and financial outcomes.

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Epidemics, local institutional quality, and corporate cash holdings

Li,

Pan,

et al. 2024

International Review of Economics & Finance

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Influence of institutional differences on trade credit use during pandemics

Cited by 5 publications

References 72 publications

Modern pandemic crises and default risk: Worldwide evidence

Modern pandemic crises and default risk: Worldwide evidence

How languages differ: Evidence from firm‐level stock price crash risk in 36 countries

Epidemics, local institutional quality, and corporate cash holdings

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