Party Membership Of The Private Enterprises And The Risk Of Stock Crash

With the rapid development of China’s capital market in the past 30 years,the allocation of social resources in China’s economy has become more and more efficient,which has continued to maintain a steady growth for a long time.However,China ’s capital market experienced large fluctuations in 2008 and 2015,which caused the wealth of our residents to shrink sharply,and the stability of the financial system was affected to a certain extent.This has created a certain challenge for developing multi-level and stable capital market in China.In recent years,the risk of stock market crash has gradually become a hot topic in academic circles.The risk of stock price crash mainly refers to the panic of investors selling stocks due to the concentrated outbreak of unfavorable news,which ultimately causes large fluctuations in the securities market.The current research on the risk of stock price crashes is mainly focused on internal and external factors of the company.The internal factors of the company include executive incentives,the company’s internal accounting stability,the majority shareholder’s shareholding,the company’s tax avoidance behavior,the corporate investment Expenditures and personal characteristics of managers,etc.and external factors of the company include the proportion of institutional investors ’ holdings and herd effects,analysts’ conflicts of interest,the accuracy of forecasting,regional investor protection levels,delisting systems and regional social trust Degree,etc.However,the research on the socialist culture and the risk of stock market crash is relatively lacking,so this article intends to analyze the impact of the socialist culture on the risk of stock market crash from this perspective.socialist culture refers to the advanced culture with Chinese characteristics created by the Communist Party of China,advanced elements and the broad masses of the people during the revolutionary war in China.It contains a rich revolutionary spirit and a strong historical and cultural connotation.Culture-influenced people have far-reaching influence.In the present era,party members are regarded as one of the symbols of socialist culture.According to statistics,the number of members of the Communist Party of China has exceeded 90 million,and the party’s grassroots organizations have exceeded 4.61 million at the end of 2018.It can be seen that the socialist culture has been closely linked to China’s economic society and its development.Due to the particularity of the appointment and removal of stateowned enterprise executives,this article examines its impact on the stock market crash from the perspective of the membership of the chairman of the board of directors of private enterprises from the following aspects mainly: First,from the perspective of material and conceptual benefits,Compared to the chairman who is not a party member,the socialist culture can reduce the violation of private company chairman’s concealment of adverse news,thereby reducing the risk of stock market crash.Secondly,from the perspective of the reputation mechanism,the chairman of a private company with party membership has strong reputational constraints,so it will reduce the risk of violations and reduce the risk of the company’s stock price crash.Finally,the increased awareness of self-monitoring and supervision of others will also improve the company’s internal management mechanism and reduce the impact of adverse news on the stock price.This article takes the private companies listed on A shares from 2008 to 2017 as a research sample,collects the party membership of the chairman of the research sample manually and empirically tests the impact of party membership on the risk of stock market crashes.Research shows:(1)The status of party member of the chairman of a private enterprise can significantly reduce the risk of a company’s stock price crashing.(2)Grouping according to whether the chairman has political affiliation,the results show that the chairman’s party membership and the risk of stock market crash are significant in the non-political affiliation group,but not significant in the political affiliation group.(3)Further,grouping according to whether there is a party organization within the company,the results show that the risk of party membership and stock price collapse is significant for a group without a party organization,but not significant in a group with a party organization.(4)Finally,group the advantages and disadvantages of the rule of law environment in the area where the company is located.The empirical results show that in areas with a poor rule of law environment,the risk of party membership and stock price collapse is significant,but not in areas with a better rule of law environment.In general,the contributions of this article are mainly in the following aspects: First,this article is based on the perspective of socialist culture,and explores the impact of the identity of the chairman of the board of directors of private enterprises on the risk of stock market crash.supplement.Secondly,this article is original to the manual collection of party memberships of the chairman of private enterprises.Finally,the conclusion of the empirical results in this article is a supplement to the theory of "culture and finance" which showing the role of socialist culture in corporate governance.