Political connection, corporate philanthropy and efficiency: Evidence from China’s anti-corruption campaign

Zhuoqun Hao, Yu Liu, Jinfan Zhang and Xiaoxue Zhao

Journal of Comparative Economics, 2020, vol. 48, issue 3, 688-708

Abstract: We find that the 2013 Chinese anti-corruption campaign remarkably reduced charitable donations from listed companies with strong political connections, and lessened government subsidies to these companies, implying a reciprocal relationship between companies and the government prior to the campaign. The campaign also improved the productivity of companies with strong connections. The results are consistent with a model in which favor exchanges between firms and the government divert resources away from production in a corrupt environment. These findings highlight a self-serving, and sometimes corrupt, motive of corporate donation, and imply that the campaign is effective in curbing corrupt collusion between companies and government officials. Moreover, they give empirical support to the negative efficiency implications of corruption.

Keywords: Corporate donation; Government subsidy; Political connection; Efficiency; China’s anti-corruption campaign (search for similar items in EconPapers)
JEL-codes: D22 D73 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:48:y:2020:i:3:p:688-708

DOI: 10.1016/j.jce.2020.03.002

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