Corporate Sustainability and Stock Price Crash Risk

Abstract

Contemporary society requires enterprises to improve the ability of sustainable development, ESG as a major indicator of corporate sustainability, and the study of its impact on stock price crash risk has attracted the attention of academia and society. This paper takes Chinese A-share listed companies as the research object to empirically test the impact of corporate sustainability on stock price crash risk. It is found that good ESG performance implying satisfactory firm sustainable development can alleviate information asymmetry and principal-agent problem, thus reducing stock price crash risk. Further heterogeneity test reveals that ESG has a stronger curbing effect on stock price crash risk for firms with low CFO. The final conclusion also passed the robustness test. The findings not only provide empirical evidence for the construction of ESG system and the suppression of stock price crash risk in emerging market countries, but also have some practical significance in promoting both corporate and so-cial sustainable development.