In the Shadows of the Government: Relationship Building During Political Turnovers

Hanming Fang, Zhe Li, Nianhang Xu and Hongjun Yan

No 25300, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We document that following a turnover of the Party Secretary or mayor of a city in China, firms (especially private firms) headquartered in that city significantly increase their "perk spending." Both the instrumental-variable-based results and heterogeneity analysis are consistent with the interpretation that the perk spending is used to build relations with local governments. Moreover, local political turnover in a city tends to be followed by changes of Chairmen or CEOs of state-owned firms that are controlled by the local government. However, the Chairmen or CEOs who have connections with local government officials are less likely to be replaced.

JEL-codes: G30 G38 (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-cna, nep-pol, nep-tra and nep-ure
Note: AP PE POL
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Citations: View citations in EconPapers (9)

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