Anti-corruption, political connections and corporate responses: Evidence from Chinese listed companies

Xuejun Jin, Zhenhao Chen and Deming Luo

Pacific-Basin Finance Journal, 2019, vol. 57, issue C

Abstract: We consider the effect of anti-corruption at the corporate level, using the Eight-Point Austerity Rules (EPAR) in China as the natural experiment. The EPAR significantly decreases the sales of politically-connected companies, while the firms' profitability remains unchanged in the associated industries. The companies pass through the negative effects of the EPAR shock to the labor market by the layoff and the wage strategies. Furthermore, there exist the regional and the size heterogeneities. State-owned companies, who have the natural political connections, have weaker negative effect than politically-connected private companies. These empirical results are robust.

Keywords: Anti-corruption; EPAR; Political connection (search for similar items in EconPapers)
JEL-codes: D73 G30 G38 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:57:y:2019:i:c:s0927538x19301027

DOI: 10.1016/j.pacfin.2019.101198

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