Abstract
This paper examines the impact of Chinese outward foreign direct investment (OFDI) on stock price crash risk, based on 6273 OFDI events completed by 1541 A-share listed companies in 128 host countries from 2000 to 2018. Using a propensity matching score (PSM) method and difference in differences (DID) estimation, we find that OFDI reduces the stock price crash risk of the investing company, and the effect is more pronounced in host countries that own better institutional environments. The mechanism analyses find that the impact of OFDI on stock price crash risk is more significant when the companies invest in areas where business is more convenient, the protection of minority investors is greater, and information disclosure is more complete.
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