The Impact of ESG Disclosure on Future Stock Price Crash Risk：The Role of Institutional Investors and Political Connections in Chinese Non－SOEs

[Purpose] In this study, by investigating the correlation between ESG disclosures and stock price crash risk, we aim to elucidate the implications of long－term institutional investor strategies and political connections on such correlation, which provides practical assistance to investors. [Methodology] This study conducts an in－depth examination of the effect of Environmental, Social, and Governance (ESG) disclosure on future stock price crash risk within the context of non－state－owned listed companies in the Chinese A－share market from 2011 to 2020. [Findings] The findings confirm that ESG disclosure of high quality significantly reduces future crash risk. This correlation can be attributed to a reduction in the managerial propensity to hoard bad news, which has traditionally been a significant contributor to sudden stock price crashes. Furthermore, the study uncovers long－term institutional investors play a pivotal role in enhancing the impact of ESG disclosure on future crash risk. This paper also finds that political connections intensify the inhibitory effect of ESG disclosure on future crash risk. [Implications] This paper enriches ESG and crash risk literature, and offers insights for improving governance and market stability.