Corporate Shared Prosperity and the Risk of Stock Price Crash

President Xi Jinping pointed out in the report of the 20th Party Congress that shared prosperity is the essential requirement of socialism and an important feature of China's modernization. The term "shared prosperity" not only sets goals for social development and income distribution but also provides direction for enterprises to align with the theme of Chinese-style modernization. This study selects samples of A-share listed companies from 2010 to 2021 and empirically analyzes the impact of corporate shared prosperity on stock price collapse. The results show a significant positive correlation between corporate shared prosperity ratings and stock price collapse risk. This conclusion remains valid after endogeneity and robustness tests. Specifically, a higher number of corporate mergers and acquisitions, lower corporate investment efficiency, and poorer information disclosure quality are important pathways through which corporate shared prosperity ratings exacerbate the risk of stock price collapse. Heterogeneity analysis indicates that this promotion effect is more significant in companies located in regions with better social welfare, better employee treatment, lower digitalization levels, lower over-leverage levels, state-owned enterprises, and companies in northern regions. This study explores "corporate shared prosperity" and provides a new research perspective on factors influencing stock price collapse risk.