Do stock prices react to announcements of corporate executives’ first-time elections as congress deputies? New evidence from the Chinese political system

Libo Yin, Zhi Su and Tong Fang

Finance Research Letters, 2022, vol. 46, issue PB

Abstract: We propose a new and direct measure of firms’ political connections under the Chinese political system, namely, the first-time elections of corporate executives as deputies to the National People's Congress. We use the event study methodology to estimate the value of political connections and firm value in China. We find that an executive's first-time election as a deputy is associated with positive abnormal returns following the announcement of elections, and such abnormal returns are more significant for private firms than for state-owned firms. Our results provide new evidence on the value of political connections.

Keywords: Political connections; Cumulative abnormal returns; Political system; Event study (search for similar items in EconPapers)
JEL-codes: G32 G41 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:46:y:2022:i:pb:s1544612321004347

DOI: 10.1016/j.frl.2021.102446

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