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Political Turnover and Firm Innovation in China: The Moderating Role of Innovation and Entrepreneurship Environment

Xing Shi, Ya Zhang, Yanrui Wu and Huaqing Wu
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Xing Shi: School of Economics, Hefei University of Technology, Hefei, China
Ya Zhang: School of Economics, Hefei University of Technology, Hefei, China
Yanrui Wu: Business School, The University of Western Australia, http://www.web.uwa.edu.au/person/yanrui.wu
Huaqing Wu: School of Economics, Hefei University of Technology, Hefei, China

No 23-08, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: The empirical work in this paper is based on an analysis of the data of China's listed companies, the innovation and entrepreneurship index, and local official turnover data at the city level. It shows that policy uncertainty caused by local political turnover in local governments significantly reduces firm innovation. However, improvement in local innovation and entrepreneurship environment can lessen this negative impact. This moderating effect is especially relevant among non-high-tech or financially constrained firms. The robustness of these findings is checked through a series of alternative analyses such as dealing with endogeneity, optional measures of the dependent variable and subsamples.

Keywords: Political turnover; Policy uncertainty; Innovation and entrepreneurship environment; Firm innovation; China (search for similar items in EconPapers)
JEL-codes: L25 O31 (search for similar items in EconPapers)
Pages: 37
Date: 2023
New Economics Papers: this item is included in nep-cna, nep-cse, nep-ent, nep-sbm and nep-ure
Note: MD5 = 0084b0b6be21d5c6c8d415d807b47215
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