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The effect of city reputation on Chinese corporate risk-taking.
- Source :
- Scientific Reports; 4/10/2024, Vol. 14 Issue 1, p1-18, 18p
- Publication Year :
- 2024
-
Abstract
- City reputation is a valuable asset for the local economy and firms in the contemporary society. However, the impact of city reputation on micro-level firms has been largely overlooked by the literature. This paper uses the National Civilized City (NCC) policy in China as a quasi-natural experiment to enhance city reputation. We employ the DID approach to investigate the relationship between city reputation and corporate risk-taking. The result shows that corporate risk-taking significantly increases following the NCC policy adoption. Moreover, information asymmetry can strengthen the positive impact of city reputation on corporate risk-taking. Channel tests show that city reputation improves financial condition and decreases default risk, leading to improved risk-taking tolerance. Overall, our paper indicates that city reputation is an important mechanism to improve corporate financial performance, providing empirical evidence for local governments to pursue the NCC title. [ABSTRACT FROM AUTHOR]
- Subjects :
- CORPORATE image
COUNTERPARTY risk
MODERN society
REPUTATION
INFORMATION asymmetry
Subjects
Details
- Language :
- English
- ISSN :
- 20452322
- Volume :
- 14
- Issue :
- 1
- Database :
- Complementary Index
- Journal :
- Scientific Reports
- Publication Type :
- Academic Journal
- Accession number :
- 176565672
- Full Text :
- https://doi.org/10.1038/s41598-024-58922-x