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Political control, corporate governance and stock-price crash risk: Evidence from China

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  • San, Ziyao
  • Wang, Shuai
  • Xiu, Zongfeng
  • Zhou, Ling
  • Zhou, Zejiang

Abstract

We find that Chinese state-owned enterprise (SOEs) with Disciplinary Commission members on the board experience lower stock price crash risk than their counterparts. This effect is less pronounced for SOEs with more shares held by non-state large shareholders. The results are robust after addressing potential endogeneity issues related to the appointment of the board of directors. Additional analysis suggests that the inclusion of Disciplinary Commission members on the board of directors reduces crash risk by mitigating agency costs, curtailing overinvestment, and improving financial reporting transparency. Collectively, our findings support the notion that the presence of Disciplinary Commission members on the board of directors strengthens the governance of SOEs.

Suggested Citation

  • San, Ziyao & Wang, Shuai & Xiu, Zongfeng & Zhou, Ling & Zhou, Zejiang, 2025. "Political control, corporate governance and stock-price crash risk: Evidence from China," Emerging Markets Review, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:ememar:v:65:y:2025:i:c:s1566014125000093
    DOI: 10.1016/j.ememar.2025.101260
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