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Communist party control and stock price crash risk: Evidence from China

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Listed:
  • Li, Xiaorong
  • Chan, Kam C.

Abstract

We examine Communist Party of China (CPC) control on a firm’s crash risk. Our findings suggest that having a CPC committee member serves as a director can lower a firm’s crash risk. Other forms of control do not lower such a risk.

Suggested Citation

  • Li, Xiaorong & Chan, Kam C., 2016. "Communist party control and stock price crash risk: Evidence from China," Economics Letters, Elsevier, vol. 141(C), pages 5-7.
    • Handle: RePEc:eee:ecolet:v:141:y:2016:i:c:p:5-7
    DOI: 10.1016/j.econlet.2016.01.018
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    References listed on IDEAS

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    1. Jin, Li & Myers, Stewart C., 2006. "R2 around the world: New theory and new tests," Journal of Financial Economics, Elsevier, vol. 79(2), pages 257-292, February.
    2. Lorenzo Caprio & Mara Faccio & John J. McConnell, 2013. "Sheltering Corporate Assets from Political Extraction," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 29(2), pages 332-354, April.
    3. Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March.
    4. Chang, Eric C. & Wong, Sonia M.L., 2004. "Political control and performance in China's listed firms," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 617-636, December.
    5. Xu, Nianhang & Yuan, Qingbo & Jiang, Xuanyu & Chan, Kam C., 2015. "Founder's political connections, second generation involvement, and family firm performance: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 33(C), pages 243-259.
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    More about this item

    Keywords

    Communist party control; Crash risk; Information; External monitoring;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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