Political connections, corruption, and investment decisions of Chinese mutual funds

Chao He and Lawrence Kryzanowski

The British Accounting Review, 2024, vol. 56, issue 5

Abstract: We examine the impact of political connections on the investment decisions of Chinese mutual funds. We identify a direct link between mutual funds' political connections and stocks held from the same political network using hand-collected information on the professional backgrounds of Chinese mutual fund managers and fund management company (FMC) shareholders. While mutual funds tend to allocate more investments to stocks based on their political connections, this effect alleviates somewhat after the 2012 anti-corruption campaign. Our findings suggest that anti-corruption campaigns can help reduce the political effects of government-related agencies on fund holdings and contribute to better market fairness.

Keywords: Politically connected funds and holdings; Fund management company ownership; Work experience in political entities; Anti-corruption campaign; Market fairness (search for similar items in EconPapers)
JEL-codes: D73 G11 G14 G18 G23 G38 M14 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:56:y:2024:i:5:s0890838923001622

DOI: 10.1016/j.bar.2023.101300

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