Public health system credibility and corporate financial risk: behavioral channels from China

Introduction Public health systems influence economic behavior by shaping information credibility and risk perception during health emergencies. While existing studies primarily focus on infection severity and epidemiological outcomes, less attention has been given to the economic implications of public health system credibility. Methods Using a sample of Chinese listed firms from 2017 to 2024, this study combines firm-level stock market data with regional indicators of public health system credibility. Firm-level financial risk is measured using stock price crash risk and downside volatility. Results The empirical results show that declines in public health system credibility are associated with higher levels of firm financial risk. Discussion Additional analyses indicate that employee behavioral withdrawal and reductions in consumer demand are related to this association. These findings suggest that credibility in public health communication may have implications for corporate financial stability beyond direct health outcomes.