Variable interest entity (VIE) mode is a unique creation and realistic choice for Chinese enterprises to list. It plays a positive role in expanding corporate financing channels and promoting corporate development. However, its unique agreement control mode will also lead to double-tier principal-agent problems, thereby affecting the stock-price crash risk of enterprises. Based on the above, this paper takes double-tier principal-agent problems as the starting point for the first time, and empirically tests the impact of VIE listing mode on the stock-price crash risk.

The results show that the VIE listing mode will increase the stock-price crash risk of enterprises. Further analysis shows that the mechanism design of the dual-class share structure can alleviate the negative impact of the VIE mode on the stock-price crash risk. Based on the impact mechanism test, the double-tier principal-agent problems caused by the VIE mode will reduce the information transparency of enterprises, and then lead to the increase of the stock-price crash risk. This paper analyzes the listing effect of VIE-mode enterprises from the perspective of stock-price crash risk for the first time, and finds that the dual-class share structure embedded in the VIE mode can play a positive role in corporate governance.

This paper enriches the relevant research on the VIE mode and dual-class share structure, and provides empirical evidence and references for the reform on the listing policy of China’s STAR-market VIE mode, the improvement of VIE-mode supervision system, and the listing decision-making of VIE-mode enterprises in China.