Board independence, financing constraints and stock price volatility: Empirical evidence from A-share listed companies in Shanghai and Shenzhen

This article takes 2018 Shanghai and Shenzhen A- share listed companies as the object, and specifically examines the influence of the independence of the board of directors and financing constraints on the fluctuation of corporate stock prices. Through empirical research, we find that financing constraints are negatively correlated with stock price volatility. The financing constraint coefficient increases by 1%, and the stock price volatility decreases by 9.88%. The greater the independence of the board of directors, the greater the impact of financing constraints on stock price volatility. The independence of the board of directors increased by 1%, and the financing constraint coefficient’s ability to restrain stock price fluctuations increased by about 28.60%. Furthermore, this paper conducts a robustness test from the three dimensions of ownership, firm size, and firm age, and verifies that the extreme tail effect of stock price collapse risk does not exist in each quantile. Based on the analysis mentioned above, this article puts forward relevant policy recommendations from the two perspectives of board independence and financing constraints.