Political Economy in China: Capital Markets, Governance, and Growth
Join us for a series of stand-alone, interrelated lunch seminars with Bernard Yeung (Dean and Stephen Riady Distinguished Professor, National University of Singapore).
December 5: 12pm-1pm in Harper Center C25: Anti-Corruption Reforms and Shareholder Valuations: Evidence from China (see below for abstract)
December 6: 12pm-1pm in Harper Center C08: the Chinese Growth Model
December 8: 12pm-1pm in Harper Center C25: the Chinese Economy: Moving Forward
Anti-Corruption Reforms and Shareholder Valuations: Evidence from China
Abstract: Chinese shares rose sharply on a 2012 announcement initiating an anti-corruption campaign. More productive and more external finance-dependent non-SOEs in higher-Q industries in more liberalized provinces gained more. Furthermore, nonSOEs’ past managerial entertainment and travel spending (ETC) is negatively related to stock value changes only in the least marketized province and positively elsewhere. Thus, anti-corruption reforms, by severing past connections, hurt nonSOEs in extremely poorly developed locations, while, by limiting bribery extraction and unleashing market forces, help nonSOEs in other regions. SOEs’ market value gains significantly more than nonSOEs in less liberalized regions, strengthening the interpretation that anti-corruption reforms raise the difficulty in doing business for nonSOEs in these regions. SOEs’ past spending on ETC is increasingly negatively related to stock value gains in more developed regions, consistent with their ETC mainly proxy for self-serving management and SOEs run by these managers are more pressed by increased market competition triggered by anti-corruption reforms.