The Value of Integrity: The Impact of Management Integrity on Corporate Financial Distress

Using data on Chinese A-share listed firms from 2012 to 2022, we examine the impact of management integrity on corporate financial distress. Our findings reveal a significant negative association between management integrity and financial distress, highlighting the crucial role of management integrity in mitigating financial distress. This effect is particularly pronounced among non-state-owned firms, firms operating in regions with inadequate legal systems, and firms with good corporate governance. Moreover, we demonstrate that management integrity directly contributes to a decrease in capital costs, thereby reducing corporate financial distress.