TARGETED POVERTY ALLEVIATION AND STOCK PRICE CRASH RISK: EVIDENCE FROM CHINA

Using manually collected samples on voluntary targeted poverty alleviation of 3418 Chinese firms for the period 2016-2019, we explore the impact of targeted poverty alleviation actions of listed companies on the stock price crash risk. Results show that listed companies participating in targeted poverty alleviation exhibited a lower risk of stock price crash risk; this conclusion is still valid after a series of robustness and endogeneity tests. This paper further explored its internal transmission routes. We found that the response of a public company to the targeted poverty alleviation policy will increase its positive coverages and plays the role of information intermediary and public supervision of media. Thus, the company's behavior of hiding bad news is curtailed, and its future stock price crash risk is significantly reduced. For the government, China's targeted poverty alleviation strategy is worthy of reference, while getting rid of poverty, the stock price crash risk of participating companies has also been effectively suppressed.