This paper investigates the effect and mechanism of the new risk warning information on the tunneling of major shareholders of non-warned enterprises in the same city based on the sample of non warned A-share public companies listed in China’s Shanghai and Shenzhen stock exchanges from 2008 to 2019. The results show that risk warning information has governance effect on tunneling behavior of major shareholders of enterprises in the same city, that is, new risk warning announcement will significantly inhibit tunneling of major shareholders of other local enterprises. This conclusion is still valid after robustness test, instrumental variable test, placebo test and propensity score matching test. The analysis of the function channel shows that the risk warning information has an infectious effect through the fundamental correlation between enterprises in the city, on the other hand, the negative sentiment within the local retail investor group further increases its risk expectations for non warned enterprises in the city, thus forming a deterrent effect on the tunneling of major shareholders of non-warned enterprises. The heterogeneity test shows that the inhibition of risk warning information on tunneling of major shareholders of other enterprises in the same city is more significant when the basic situation of non warned enterprises is poorer and the local preference is higher.