The Impact Of Party Committees' Involvement In Governance On The Risk Level Of China's State-Owned Listed Companies

Since the 18th National Congress of the Communist Party of China,General Secretary Xi Jinping has repeatedly stressed the need to strengthen and improve the Chinese Communist Party's leadership.The latest revised "Principles for the Governance of Listed Companies" by the China Securities Regulatory Commission also increased the party building requirements of listed companies.Therefore,state-owned enterprise party committee play an increasingly important role in corporate governance.Then,whether the involvement of party committees of the Chinese Communist Party in corporate governance can play the role of risk prevention and control,and affect the company's risk level is an important issue to be studied.Based on the unique corporate governance mechanism of the involvement of party committees in corporate governance,this paper selects the state-owned enterprises listed in the Shanghai and Shenzhen A-share markets from 2004 to 2015 based on the leadership system of "two-way access and cross-employment" of the state-owned enterprise party committees.The sample,using OLS estimation method,fixed effect model,2SLS-IV and Heckman two-step method,empirically test the impact of party committees' participation in corporate governance on the company's risk level.This paper finds that:(1)The leadership system of "two-way access and cross-employment" currently implemented by state-owned enterprises in China has played a positive role in risk prevention and control,which can significantly reduce the company's risk level.This result is still established after a series of robustness tests.(2)The influence of party committees' involvement in corporate governance on the company's risk level is mainly through the channels of the board of directors and the board of supervisors.In terms of "two-way access",when party committees' involvement in corporate governance through the channels of the board of directors and the board of supervisors,they can significantly reduce the total risks and corporate trait risks of state-owned listed companies.In terms of "cross-disciplinary",when the party committee(deputy)secretary serves as the(deputy)chairman,it can significantly reduce the total risk and corporate trait risk of state-owned listed companies;when the party committee(deputy)secretary concurrently serves as the CEO or general manager,the state-owned listing The impact of the company's risk level is not significant.(3)The involvement of party committees in corporate governance can influence the risk level of state-owned listed companies through decision-making mechanisms.The involvement of party committees in corporate governance can reduce the risk level of state-owned listed companies by reducing excessive debt and excessive investment.(4)The involvement of party committees in corporate governance can influence the risk level of state-owned listed companies through supervision mechanisms.Before the implementation of campaign initiated by the 18th National Congress of the Communist Party of China in 2012.,the governance participation of the party committees played a more significant role in preventing and controlling the risks of state-owned listed companies.Compared with the areas with strong legal system environment,the prevention and control of the participation of party committees in the risk of state-owned listed companies is more significant in areas with weak legal systems.There is an alternative relationship between the supervisory role played by the party committees in corporate governance and the supervisory role of external governance mechanisms.When other external governance mechanisms fail to function,the party committees'participation in corporate governance can replace the external governance mechanism to play a supervisory role.This study is an exploratory study based on the involvement of party committees in corporate governance,a unique corporate governance mechanism in China.The research in this paper provides more detailed clues for understanding the influence of party organizations'participation in corporate governance on corporate decision-making and corporate risk level,and has important theoretical and practical significance for the promotion and deepening of current state-owned enterprise party building work.