What do we learn from stock price reactions to China’s first announcement of anti-corruption reforms?

Chen Lin, Randall Morck, Bernard Yeung and Xiaofeng Zhao

No 22001, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: China’s markets gained 3.86% around December 4, 2012, when the Party announced anti-corruption reforms. State-owned enterprises (SOEs) with higher past entertainment and travel costs (ETC) gained more. NonSOEs gained in more liberalized provinces, especially those with high past ETC, productivity, growth opportunities, and external financing. NonSOEs lost in the least liberalized provinces, especially those with high past ETC. These findings support investors’ expect reduced official corruption to create value overall, reduce SOE waste, lower bureaucratic barriers to efficient resource allocation where markets function, and impede business in unliberalized provinces, where “getting things done” still requires investment in greasing bureaucratic gears.

JEL-codes: D70 G34 G38 P2 (search for similar items in EconPapers)
Date: 2016-02
New Economics Papers: this item is included in nep-cna, nep-law and nep-tra
Note: CF
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Citations: View citations in EconPapers (18)

Published as Chen Lin & Randall Morck & Bernard Yeung & Xiaofeng Zhao, 2023. "What do we learn from stock price reactions to China’s first announcement of anti-corruption reforms?," The Journal of Finance and Data Science, .

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