Government‐Level Political Risk Perception and Corporate Violations: Evidence From China

ABSTRACT This paper investigates the impact of government‐level political risk perception on corporate violations. Using data from A‐share listed companies in China's Shanghai and Shenzhen stock exchanges from 2000 to 2022, we construct an index system to measure the intensity of geopolitical risk perception and incorporate it into the analysis of corporate misconduct. The results show that stronger government perception of geopolitical risk is associated with a higher likelihood of corporate violations. Mechanism analysis reveals that political risk perception increases the probability of corporate misconduct by amplifying capital market volatility and weakening financial regulatory intensity. Heterogeneity analysis further indicates that the effect is more pronounced among firms operating in regions with higher levels of marketisation, lower quality of information disclosure and lower levels of analyst and media attention. This study provides a novel perspective on how macro‐level political uncertainty shapes micro‐level corporate behaviour and offers theoretical insights for the formulation of regulatory policies.