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Depoliticization and Stock Price Crash Risk: Evidence from China

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  • Xinghe Liu
  • Jun Gao
  • Zeyi Chen
  • Yuqing Huang

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.

Suggested Citation

  • Xinghe Liu & Jun Gao & Zeyi Chen & Yuqing Huang, 2023. "Depoliticization and Stock Price Crash Risk: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(7), pages 2313-2327, May.
    • Handle: RePEc:mes:emfitr:v:59:y:2023:i:7:p:2313-2327
    DOI: 10.1080/1540496X.2023.2181064
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    Cited by:

    1. Wu, Dan & Dai, Xingyu & Zhao, Ruikun & Cao, Yaru & Wang, Qunwei, 2023. "Pass-through from temperature intervals to China's commodity futures’ interval-valued returns: Evidence from the varying-coefficient ITS model," Finance Research Letters, Elsevier, vol. 58(PA).

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