Study On The Influence Of Executive Party Membership And Stock Price Crash Risk

A stock price crash is a financial phenomenon in which a company’s stock price plummets in a short period of time.Stock price crash not only causes investors to suffer huge losses,but also disturbs the stability of the whole stock market.Therefore,it is essential to know the influencing factors of stock price crash and effective prevention and control measures to promote the healthy development of the capital market.As the core of an enterprise,the behaviors and decisions of senior executives will seriously affect the business performance of the enterprise.Then,will senior executives,as members of the Communist Party of China,restrain the risk of stock price collapse due to the influence of the Party’s values and ideological education?If there is inhibition,by what mechanism of action?Is the relationship between the two affected by internal and external situational factors?The party membership of the Communist Party of China is playing an increasingly important role in the economic development of the new era.How it affects the behavior and decision-making of senior executives and even the operation results of enterprises is a topic worth discussing.On the basis of theoretical analysis and from the perspective of party membership of senior executives,this paper selects the data of A-share listed companies from 2008 to 2018,this paper discusses the influence of party members’ altruism,law-abiding awareness and pioneering role on the risk of stock price crash.The results indicate that:(1)there is a negative correlation between the proportion of executive party members and the risk of stock price crash,that is,the membership of executive party members can significantly reduce the risk of stock price crash;(2)In non-state-owned enterprises,enterprises with low quality of internal control and enterprises with weak external policy supervision,executive party membership can serve as a supplement and significantly restrain the risk of stock price collapse;(3)The proportion of senior executives to party members mainly reduces the risk of stock price collapse by reducing the first type of agency cost and improving information transparency.The robustness of this paper was verified by the methods of replacing the measurement of dependent and independent variables,PSM pairing and eliminating the influence of extreme samples.In this paper,the party membership of senior executives is taken as the entry point,which not only enriches the research on the economic consequences of the characteristics of senior executives’ backgrounds,but also has positive implications for the prevention and control of stock price crash risk,and has certain practical significance for improving the mechanism of senior executives’ selection and recruitment of enterprises and promoting the stability of capital market.