Depoliticization and Stock Price Crash Risk: Evidence from China

Xinghe Liu, Jun Gao, Zeyi Chen and Yuqing Huang

Emerging Markets Finance and Trade, 2023, vol. 59, issue 7, 2313-2327

Abstract: Using the enactment of Document No. 18 as a quasi-natural event, we take a sample of Chinese A-share listed companies from 2010 to 2017 to test the impact of depoliticization on stock price crash risk based on the difference-in-differences (DID) model. Our results show that depoliticization reduces future stock price crash risk more significantly among non-state-owned enterprises. Furthermore, depoliticization can mitigate stock price crash risk through the effects of financing needs, censorship risk and agency cost.

Date: 2023
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DOI: 10.1080/1540496X.2023.2181064

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