From governance to stability: How party organizations in private enterprises influence stock price crash risk

•Party organizations reduce stock crash risk in private enterprises.•Impact pronounced in younger firms, weaker governance contexts.•The effectiveness of governance is moderated by agency costs and the quality of information disclosure. This article delves into the data of A-share listed private companies from 2010 to 2022, utilizing a DID model to conduct a comprehensive study on how the establishment of party organizations affects the risk of stock price crashes. The research reveals that party organizations significantly mitigate the risk of stock price crashes in private enterprises, particularly in areas with higher marketization levels, among younger companies, and in companies with weaker internal governance. The introduction of party organizations bolsters internal oversight mechanisms, enhancing corporate governance quality and encouraging companies to embrace social responsibilities and ethical standards, thereby minimizing risk accumulation.