Equity ETFs, corporate governance and stock price crash risk

Qi Wang and Sipeng Wang

Finance Research Letters, 2025, vol. 83, issue C

Abstract: This paper systematically explores the influence mechanism and boundary conditions of ETF shareholding ratios on stock price crash risk using a sample of non-financial listed companies in China's A-share market from 2013 to 2023. Empirical results show a significant positive correlation between ETF shareholding ratios and stock price crash risk. High-quality internal controls amplify ETF algorithm-driven homogenized expectations by enhancing information transparency. Under negative shocks, this triggers liquidity spirals and agency problems, magnifying crash risks. Analyst coverage, however, plays a negative moderating role by significantly mitigating the risk impact of ETF position changes.

Keywords: Equity ETFs; Corporate governance; Stock price crash risk (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:83:y:2025:i:c:s1544612325009845

DOI: 10.1016/j.frl.2025.107726

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