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

Copyright Owner and License

Authors

Additional URL

https://ssrn.com/abstract=2549482

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