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Equity ETFs, corporate governance and stock price crash risk

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  • Wang, Qi
  • Wang, Sipeng

Abstract

This paper systematically explores the influence mechanism and boundary conditions of ETF shareholding ratios on stock price crash risk using a sample of non-financial listed companies in China's A-share market from 2013 to 2023. Empirical results show a significant positive correlation between ETF shareholding ratios and stock price crash risk. High-quality internal controls amplify ETF algorithm-driven homogenized expectations by enhancing information transparency. Under negative shocks, this triggers liquidity spirals and agency problems, magnifying crash risks. Analyst coverage, however, plays a negative moderating role by significantly mitigating the risk impact of ETF position changes.

Suggested Citation

  • Wang, Qi & Wang, Sipeng, 2025. "Equity ETFs, corporate governance and stock price crash risk," Finance Research Letters, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:finlet:v:83:y:2025:i:c:s1544612325009845
    DOI: 10.1016/j.frl.2025.107726
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