This study investigates whether government-led data transparency initiatives enhance capital market stability by reducing stock price crash risk (SPCR) in emerging economies. Utilizing the staggered establishment of Public Data Open Platforms (PDOPs) across 173 Chinese cities as a quasi-natural experiment, we employ a difference-in-differences methodology with comprehensive fixed effects on 15,847 firm-year observations of A-share listed companies from 2007 to 2021. The empirical findings indicate that PDOP implementation is associated with substantially lower SPCR, with firms experiencing approximately 18 percent lower negative skewness and 20 percent lower down-to-up volatility ratios following platform establishment. These results remain robust across placebo tests, entropy balancing, alternative crash risk measures, and heterogeneity-robust DID estimators. Our channel analysis identifies external monitoring as the primary mechanism through which public data constrains managerial bad news hoarding, supported by direct tests using analyst following, media coverage, and institutional ownership as monitoring proxies, and we document complementary support for an operational performance channel that reduces the generation of negative news at the source. The effects are more pronounced for non state owned enterprises and firms with weaker pre-treatment governance. The findings carry implications for the 75 countries pursuing open government data initiatives, suggesting that such platforms can enhance market efficiency in emerging economies with comparable information environments, although the magnitude of benefits likely varies with institutional quality and enforcement capacity.
Liu et al. (Mon,) studied this question.