Government resource allocation through related party transactions: Evidence from China

Lu Wang, Jing Chi and Jing Liao
Additional contact information
Lu Wang: School of Accounting, Zhejiang University of Finance & Economics, Hangzhou, China
Jing Liao: School of Economics and Finance, Massey University, Palmerston North, New Zealand

Australian Journal of Management, 2025, vol. 50, issue 2, 571-606

Abstract: Using unique hand-collected data of related party transactions (RPTs) between state-owned enterprises (SOEs) and government noncorporate agencies in China, we investigate the behavior of government resource allocation and its impacts. We find that Chinese governments are more likely to allocate resources to SOEs with a politically connected chairperson of the board through RPTs. The results remain robust after considering endogeneity concerns. In SOEs with a politically connected chairperson, resources obtained through RPTs are not associated with improved economic outputs except for increased investment expenditures. In addition, resources obtained are associated with improved labor cost stickiness. Our results add new evidence of the political exchange between Chinese governments and SOEs facilitated by politically connected executives. JEL Classification: G30, G38

Keywords: Labor cost stickiness; personnel political connections; related party transactions; state-owned enterprises (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/03128962231203520 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:50:y:2025:i:2:p:571-606

DOI: 10.1177/03128962231203520

Access Statistics for this article

More articles in Australian Journal of Management from Australian School of Business
Bibliographic data for series maintained by SAGE Publications ().