Anti-corruption campaign and capacity utilization of state-owned enterprises: Evidence from China’s central committee inspection

Qianbin Feng, Xiao Hu, Xinyi Deng and Jun Lu

Economic Analysis and Policy, 2023, vol. 80, issue C, 319-346

Abstract: Firms cannot utilize capacity probably rooted in factors beyond technical constraints, like corruption. This paper systematically investigates the causal effect of the anti-corruption campaign (ACUC) on corporate capacity utilization. Based on the financial data of China’s state-owned listed companies from 2007 to 2018, we calculate the firm-level capacity utilization rate and employ central committee inspection (CCI) as a quasi-natural experiment to come to the following findings. Firstly, we find that the anti-corruption campaign significantly increases the capacity utilization of SOEs by 10.4 percentage points, which remains robust across a set of robustness checks. Secondly, anti-corruption campaign affects corporate capacity utilization by diminishing agency cost, improving investment efficiency and promoting technological innovation. Thirdly, the positive policy effects are more pronounced for firms with a lower level of capacity utilization and weaker motivation for political promotion. Finally, we find the impact spillover through the supply chain, but only for suppliers to customers. And the multiple-treatment effects are insignificant. Our findings highlight the evidence of having an anti-corruption campaign for enhancing the operational efficiency and performance of SOEs and provide new views for emerging markets on how to supervise SOEs.

Keywords: Anti-corruption campaign; Corporate capacity utilization; Central committee inspection; Governance effect; Supply chain spillover (search for similar items in EconPapers)
JEL-codes: D73 G30 L23 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:80:y:2023:i:c:p:319-346

DOI: 10.1016/j.eap.2023.08.010

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