Abstract: In recent years, the phenomenon of stock price crash is becoming even more violet in Chinese stock market, so it is urgent to strengthen its risk control. From the perspective that there is a special relationship between government and enterprises and based on enterprises which listed on Growth Enterprise Market from 2009 to 2012, this study examines the effect of political connection on enterprises′ stock price crash risk and further analyzes the intermediary mechanism of earnings management. The study finds that, political connection has a significant positive relationship with stock price crash risk; path test reveals that the actual earnings management is part mediating factor while the accrual earnings management is complete mediating factor in the formation of corporate political connection crash effect. These indicates that the political connection provides the surplus control space for enterprises, which decreases the quality of corporate financial information and increases the corporate′s stock price crash risk. This study is more of Chinese local characteristics and proposes new thinking to the analysis of stock price crash risk.

Key words: political connections, stock price crash risk, mediation effect, Growth Enterprises Market