Can the participation of party organizations in corporate governance enhance the risk-bearing capacity of listed companies?

Abstract

The research employs a dataset encompassing Chinese listed firms over the 2009–2022 timeframe, aiming to explore whether the participation of party organizations in corporate governance can enhance the risk-taking levels of listed companies, and further analyze the moderating effect of strong financial regulation on this relationship. The research results indicate a significant negative correlation between the participation of party organizations in corporate governance and the risk-taking levels of listed companies, suggesting that such participation may inhibit corporate risk-taking behavior. Moreover, this relationship exhibits heterogeneity between companies with standard audit opinions and those without; specifically, in companies without standard audit opinions, the inhibitory effect of party organization participation on risk-taking levels is more pronounced. Similarly, differences are also observed in the impact of party organization participation on risk-taking levels between high-tech and non-high-tech industry companies, with the inhibitory effect being relatively weaker in high-tech firms. Further analysis reveals that corporate social responsibility plays a mediating role between the participation of party organizations in corporate governance and the risk-taking levels of listed companies, while strong financial regulation moderates the relationship between the two, particularly in environments with stringent financial regulation, where the presence of party organization involvement exerts a more pronounced inhibitory effect on the levels of risk-taking.