The participation of Party organizations in governance through “two-way entry and cross-serving” is a special institutional arrangement of Chinese corporate governance. As the concentrated expression of the Party’s proposition in micro-enterprises, the participation of Party organizations will have a significant impact on the business decision-making of enterprises. With the deepening of registration system reform, sufficient and authentic information disclosure of listed companies has become the core point of capital market reform, but few studies have included information disclosure violations into the research framework of Party organization participation in governance. Then, if Party organizations adopt “two-way entry and cross-serving” to participate in corporate governance, can it restrain corporate information disclosure violations?
This paper takes China’s A-share non-financial listed companies from 2010 to 2020 as the research sample, empirically tests the impact of Party organization participation in governance on corporate information disclosure violations from the two dimensions of “two-way entry and cross-serving”. The results show that: (1) The participation of Party organizations in governance can inhibit information disclosure violations. Specifically, “two-way entry and cross-serving” can inhibit the violation tendency and number of information disclosure. After considering omitted variable bias, self-selection problems, and mutual causality, the empirical results are still robust. (2) The participation of Party organizations in governance can play a positive governance role by improving the quality of internal control and reducing operational risks, thereby inhibiting information disclosure violations. (3) The participation of Party organizations in governance has a more significant inhibitory effect on information disclosure violations. However, in the context of different government industry regulations, there is no significant difference.
The contributions are as follows: (1) This paper expands the research scope of Party organization participation in governance from the perspective of corporate information disclosure. The quality of information disclosure is the core element of the deepening reform of the capital market, which is directly related to fairness, pricing efficiency and resource allocation capabilities. It verifies the information disclosure governance effect of Party organization participation in governance at the capital market level, and also provides supplementary evidence for socialist corporate governance with Chinese characteristics. (2) This paper enriches the relevant research on the influencing factors of information disclosure violations from the perspective of Party politics. It studies the mechanism of internal control quality and operational risks in the impact of Party organization participation in governance on information disclosure violations, enriching the relevant literature in the fields of corporate governance, personal characteristics and information disclosure violations. (3) This paper reveals the nature of property rights and the heterogeneity of government industry regulation from the dimension of the relationship between the government and enterprises, and more comprehensively answers the impact of Party organization participation in governance on information disclosure violations. It provides a certain experience reference for strengthening the construction of Party organizations, purifying the market ecology, and maintaining the economic order of the capital market.