Raising short-term debt for long-term investment and stock price crash risk: Evidence from China

The purpose of this paper is to investigate the impact of raising short-term debt for long-term investment (SDFLI) on stock price crash risk. Using data from China's stock market, this paper provides insights not only on the consequences of SDFLI but also the underlying channels through which SDFLI affects crash risk. Evidence shows that SDFLI leads to less information disclosure, higher information risk, and lower information transparency, which eventually exacerbates future crash risk. Moreover, the effect of SDFLI on crash risk is affected by firm characteristics, monitoring mechanisms, and economic environment.