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The monitoring effect of CSI 300 inclusion: Evidence from enterprise risk management adoption

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  • Dong, Haiyan
  • Shen, Yu

Abstract

While recent evidence finds negative consequences of the public scrutiny following index inclusion, we investigate its potential benefits for corporate governance. Utilizing the cutoff rules between the CSI 300 and CSI 500 indices, this paper employs a Regression Discontinuity Design (RDD) to identify the causal effect of CSI 300 inclusion on Enterprise Risk Management (ERM) adoption. We find that CSI 300 inclusion significantly promotes ERM adoption, primarily through a “monitoring effect” manifested in increased analyst coverage, media attention, and investor attention. Furthermore, this effect is significantly stronger for firms that attract more stock forum discussions and had received regulatory penalties prior to their initial index inclusion. Our findings suggest that public scrutiny following CSI 300 inclusion can serve as an important catalyst for improving fundamental governance structures, thereby highlighting a significant but previously overlooked determinant of corporate risk governance.

Suggested Citation

  • Dong, Haiyan & Shen, Yu, 2026. "The monitoring effect of CSI 300 inclusion: Evidence from enterprise risk management adoption," Finance Research Letters, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:finlet:v:93:y:2026:i:c:s1544612326001650
    DOI: 10.1016/j.frl.2026.109634
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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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