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Can a not-for-profit minority institutional shareholder impede stock price crash risk: Evidence from China

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Listed:
  • Hu, Yi
  • Jin, Shuchang
  • Gu, Qiankun
  • Tang, Ziling

Abstract

The China Securities Regulatory Commission (CSRC) authorized the China Securities Investor Service Center (CSISC), an affiliate of CSRC, to buy and hold 100 shares of each listed firm in the pilot regions in January 2016. We investigate the effects of the CSISC shareholding pilot program on stock price crash risk. We find CSISC shareholding significantly reduces stock price crash risk, especially among firms with poor internal and external governance. We also find the negative effect is more prominent for firms without political connections and with a low propensity for minority shareholder activism. We contribute to the studies on minority shareholder protections and enrich the literature on both the stock price crash risk and the economic consequence of CSICS shareholding.

Suggested Citation

  • Hu, Yi & Jin, Shuchang & Gu, Qiankun & Tang, Ziling, 2022. "Can a not-for-profit minority institutional shareholder impede stock price crash risk: Evidence from China," Finance Research Letters, Elsevier, vol. 47(PA).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612322002148
    DOI: 10.1016/j.frl.2022.102961
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Huang, Fumian & Ge, Liming & Wu, Sirui, 2023. "Minority shareholder protection, corporate governance, and investment efficiency," Finance Research Letters, Elsevier, vol. 58(PC).
    2. Hu, Yi & Jin, Shuchang & Xiong, Zhitao, 2025. "Regulator as a minority shareholder: How does public-plus-private enforcement affect investment-to-price sensitivity?," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 1790-1815.
    3. Chen, Rongrong & Chen, Xiaomeng Charlene, 2025. "Regulatory influence on corporate cash holdings: Minority shareholder activism by regulators," International Review of Financial Analysis, Elsevier, vol. 102(C).
    4. Zhang, Zixi & Cheng, Xiaoke & Cheng, Hanxiu & Sun, Qian, 2024. "Supervision of not-for-profit minority institutional shareholder and the cost of equity: Evidence from a quasi-natural experiment," Finance Research Letters, Elsevier, vol. 63(C).
    5. Chen, Shen & Chen, Yuran & Zhang, Di & Wang, Jinmei, 2023. "Can minority investor activism promote corporate risk-taking? Evidence from a quasi-natural experiment in China," International Review of Financial Analysis, Elsevier, vol. 85(C).
    6. Xiong, Wenjing & Zhu, Pingheng & Wen, Fenghua, 2025. "The signalling role of a regulatory minority shareholder exercising rights: Evidence from firm’s bank loans," Research in International Business and Finance, Elsevier, vol. 75(C).
    7. Zhang, Li & Chen, Xikai & Peng, Jiao & Guo, Tongtong, 2025. "Can digital inclusive finance promote the Internet business model? Empirical evidence from Chinese listed firms," International Review of Financial Analysis, Elsevier, vol. 102(C).
    8. Zhao, Ziying & Lu, Chao & Xia, Xiaoxue, 2024. "Regulator as a minority shareholder and corporate fraud: Quasi-natural experiment evidence from the pilot project of China Securities Investor Services Center," The British Accounting Review, Elsevier, vol. 56(5).
    9. Liu, Guangqiang & Liu, Boyang, 2023. "How digital technology improves the high-quality development of enterprises and capital markets: A liquidity perspective," Finance Research Letters, Elsevier, vol. 53(C).

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    Keywords

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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