Publication Type
Working Paper
Version
submittedVersion
Publication Date
10-2016
Abstract
We examine the impact of political influence and ownership on corporate investment by exploiting the unique way provincial leaders are promoted in China. The tournament-style promotion system creates incentives for new governors to exert influence over investment in the early years of their term. We find a divergence in investment rates between state owned enterprises (SOEs) and private firms following political turnover. SOEs increase investment by 6.0% following the turnover while investment rates for private firms decline, suggesting that the political influence exerted over SOEs may crowd out private investment.
Keywords
Corporate investment, Political turnover, China, SOE, Political uncertainty, Grabbing-hand, Crowding out, Investment efficiency
Discipline
Asian Studies | Corporate Finance | Finance and Financial Management
First Page
1
Last Page
52
Embargo Period
11-10-2019
Citation
CAO, Jerry X.; BRANDON, Julio; LENG, Tiecheng; and ZHOU, Sili.
Political turnovers, ownership, and corporate investment in China. (2016). 1-52.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/6420
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://ssrn.com/abstract=2549482
Included in
Asian Studies Commons, Corporate Finance Commons, Finance and Financial Management Commons