| Abstract | The economic consequence of corporate pyramids within different ownership nature of firms is a key issue in finance, and the study on stock price crash risk has drawn much attention recently. Using a sample of A-share listed firms in China for the period 2001-2011, this paper investigates the relationship between corporate pyramids and stock price crash risk. Our results show that, firstly, for SOEs, corporate layer significantly decreases stock price crash risk. Secondly, for private firm, there is no linear relationship between corporate layer and stock price crash risk. Thirdly, in SOEs, the impact of corporate pyramids on stock price crash risk is less pronounced when the financial statement is more opaque, there is more related party sales. In contrast, if SOEs issue H share, the impact is more pronounced. In addition, our results show that, corporate layer also decreases stock price synchronicity in SOEs. However, there exists an inverse U-shape relationship between corporate layer, stock price crash risk and stock price synchronicity in private firms. These findings have important implications for our understanding the market risk of firms with different organizational structure and the development of capital market in China. |