Government reporting credibility as immunity: Evidence from a public health event

IF 2.9 3区经济学 Q2 BUSINESS, FINANCE Journal of Multinational Financial Management Pub Date : 2024-03-15 DOI:10.1016/j.mulfin.2024.100847

Christine Jiang , Xiaori Zhang , Bill Hu

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Abstract

We investigate the relationship between the credibility of officially reported COVID-19 infection cases and the direct effects of the public health crisis on stock market performance. Employing the law of left digits, we estimate the likelihood of misreporting in official data to evaluate government reporting credibility (RC). A higher deviation from expected Benford’s distributions implies a greater likelihood of misreporting and lower RC. Our premise is that high credibility of government reporting during crisis mitigates the negative consequences of disasters through lowering investors’ risk aversion and bolstering their confidence. Our main results are highly consistent with this hypothesis. The positive influence of RC is particularly pronounced for companies situated in economies characterized by higher uncertainty and weaker governance before the crisis, and during periods of heightened market panic. Our findings suggest that the credibility of government reporting can act as immunity-like protection for stock markets in times of crisis.

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作为免疫力的政府报告公信力：来自公共卫生事件的证据

我们研究了官方报告的 COVID-19 感染病例的可信度与公共卫生危机对股市表现的直接影响之间的关系。利用左数定律，我们估算了官方数据中误报的可能性，以评估政府报告的可信度（RC）。与预期本福德分布的偏差越大，意味着误报的可能性越大，RC 越低。我们的前提是，危机期间政府报告的高可信度可以通过降低投资者的风险规避和增强他们的信心来减轻灾害的负面影响。我们的主要结果与这一假设高度一致。对于危机前不确定性较高、治理较弱的经济体中的公司，以及在市场恐慌加剧的时期，RC 的积极影响尤为明显。我们的研究结果表明，政府报告的可信度可以在危机时期为股市提供类似于免疫力的保护。

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来源期刊

Journal of Multinational Financial Management BUSINESS, FINANCE-

CiteScore

7.30

自引率

4.80%

发文量

审稿时长

30 days

期刊介绍： International trade, financing and investments have grown at an extremely rapid pace in recent years, and the operations of corporations have become increasingly multinationalized. Corporate executives buying and selling goods and services, and making financing and investment decisions across national boundaries, have developed policies and procedures for managing cash flows denominated in foreign currencies. These policies and procedures, and the related managerial actions of executives, change as new relevant information becomes available. The purpose of the Journal of Multinational Financial Management is to publish rigorous, original articles dealing with the management of the multinational enterprise. Theoretical, conceptual, and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • Foreign exchange risk management • International capital budgeting • Forecasting exchange rates • Foreign direct investment • Hedging strategies • Cost of capital • Managing transaction exposure • Political risk assessment • International working capital management • International financial planning • International tax management • International diversification • Transfer pricing strategies • International liability management • International mergers.

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