De-politicization and corporate risk-taking

Publication Type

Journal Article

Publication Date

11-2025

Abstract

We examine the impact of China's de-politicization regulation Rule 18 on corporate risk-taking. This rule mandates government officials to step down from their positions on the boards of public firms, thereby severing the political ties through official directors. Employing a staggered difference-in-differences design, our study reveals that the collapse of political connections results in a significant decrease in the level of risk-taking among politically connected firms. Furthermore, we identify bank credit and direct government support as plausible channels through which these effects manifest and highlight the presence of heterogeneous effects across different contextual factors.

Keywords

Anti-corruption campaign, Political connections, Risk-taking

Discipline

Economics | Finance

Research Areas

Corporate Reporting and Disclosure

Publication

Emerging Markets Review

Volume

69

First Page

1

Last Page

23

ISSN

1566-0141

Identifier

10.1016/j.ememar.2025.101357

Publisher

Elsevier

Additional URL

https://doi.org/10.1016/j.ememar.2025.101357

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