From governance to stability: How party organizations in private enterprises influence stock price crash risk

Huan Wang, Shui Li and Hengtao Liu

Finance Research Letters, 2024, vol. 64, issue C

Abstract: This article delves into the data of A-share listed private companies from 2010 to 2022, utilizing a DID model to conduct a comprehensive study on how the establishment of party organizations affects the risk of stock price crashes. The research reveals that party organizations significantly mitigate the risk of stock price crashes in private enterprises, particularly in areas with higher marketization levels, among younger companies, and in companies with weaker internal governance. The introduction of party organizations bolsters internal oversight mechanisms, enhancing corporate governance quality and encouraging companies to embrace social responsibilities and ethical standards, thereby minimizing risk accumulation.

Keywords: Party organizations; Private enterprises; Stock price crash risk (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:64:y:2024:i:c:s1544612324004471

DOI: 10.1016/j.frl.2024.105417

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