The dark side of marital leadership: Evidence from China

Using a unique dataset of Chinese private firms, we find that marital leadership is associated with higher propensity for financial fraud. We examine the potential economic mechanisms that lead to this result, finding that weak internal supervision and inefficient decision-making provide crucial linkages between marital leadership and financial fraud. However, well-functioning corporate governance mechanisms reduce the negative effects of marital leadership. Our findings provide important empirical evidence for the effect of family involvement in corporate governance and contribute to the literature on the determinants of financial fraud in listed firms.

Automated summary

Using a unique dataset of Chinese private firms, the study finds that marital leadership is associated with higher propensity for financial fraud. The research identifies weak internal supervision and inefficient decision-making as crucial linkages between marital leadership and financial fraud, while well-functioning corporate governance mechanisms reduce the negative effects of marital leadership.