The value of political connections: Evidence from China's Anti-Corruption Campaign

Detalhes bibliográficos
Autor(a) principal: Alonso, Marta
Data de Publicação: 2021
Outros Autores: Palma, Nuno, Simon-Yarza, Beatriz
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/10451/50917
Resumo: We study the value of the political connections of directors on Chinese boards. We build a new dataset that measures connections of directors to members of the Politburo via past school ties, and find that private firms with politically connected directors in the boardroom get on average about 16% higher subsidies over sales per firm (7 million yuan). Connected state-owned enterprises access debt at 11% cheaper cost, which translates into average savings of close to 32 million yuan per firm in lower interest payments. We find that the value of the political connections persisted after the Anti-Corruption Campaign of 2012. It became weaker for the cost of debt in state-owned enterprises, but stronger for subsidies to private firms. We argue that the value of connections in the private sector increased after the Anti-Corruption Campaign because they became a less risky alternative to corruption. We also show that connected firms do not perform better.
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spelling The value of political connections: Evidence from China's Anti-Corruption CampaignBoard of directorsPolitical connectionsChinaMisallocationWe study the value of the political connections of directors on Chinese boards. We build a new dataset that measures connections of directors to members of the Politburo via past school ties, and find that private firms with politically connected directors in the boardroom get on average about 16% higher subsidies over sales per firm (7 million yuan). Connected state-owned enterprises access debt at 11% cheaper cost, which translates into average savings of close to 32 million yuan per firm in lower interest payments. We find that the value of the political connections persisted after the Anti-Corruption Campaign of 2012. It became weaker for the cost of debt in state-owned enterprises, but stronger for subsidies to private firms. We argue that the value of connections in the private sector increased after the Anti-Corruption Campaign because they became a less risky alternative to corruption. We also show that connected firms do not perform better.CAGE Research Centre. Department of Economics, University of WarwickRepositório da Universidade de LisboaAlonso, MartaPalma, NunoSimon-Yarza, Beatriz2022-01-21T16:01:00Z20212021-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10451/50917engAlonso, M., Palma, N., Simon-Yarza, B. (2021). The value of political connections: Evidence from China's Anti-Corruption Campaign. CAGE working paper no. 558info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-11-08T16:55:20Zoai:repositorio.ul.pt:10451/50917Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T22:02:16.787957Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv The value of political connections: Evidence from China's Anti-Corruption Campaign
title The value of political connections: Evidence from China's Anti-Corruption Campaign
spellingShingle The value of political connections: Evidence from China's Anti-Corruption Campaign
Alonso, Marta
Board of directors
Political connections
China
Misallocation
title_short The value of political connections: Evidence from China's Anti-Corruption Campaign
title_full The value of political connections: Evidence from China's Anti-Corruption Campaign
title_fullStr The value of political connections: Evidence from China's Anti-Corruption Campaign
title_full_unstemmed The value of political connections: Evidence from China's Anti-Corruption Campaign
title_sort The value of political connections: Evidence from China's Anti-Corruption Campaign
author Alonso, Marta
author_facet Alonso, Marta
Palma, Nuno
Simon-Yarza, Beatriz
author_role author
author2 Palma, Nuno
Simon-Yarza, Beatriz
author2_role author
author
dc.contributor.none.fl_str_mv Repositório da Universidade de Lisboa
dc.contributor.author.fl_str_mv Alonso, Marta
Palma, Nuno
Simon-Yarza, Beatriz
dc.subject.por.fl_str_mv Board of directors
Political connections
China
Misallocation
topic Board of directors
Political connections
China
Misallocation
description We study the value of the political connections of directors on Chinese boards. We build a new dataset that measures connections of directors to members of the Politburo via past school ties, and find that private firms with politically connected directors in the boardroom get on average about 16% higher subsidies over sales per firm (7 million yuan). Connected state-owned enterprises access debt at 11% cheaper cost, which translates into average savings of close to 32 million yuan per firm in lower interest payments. We find that the value of the political connections persisted after the Anti-Corruption Campaign of 2012. It became weaker for the cost of debt in state-owned enterprises, but stronger for subsidies to private firms. We argue that the value of connections in the private sector increased after the Anti-Corruption Campaign because they became a less risky alternative to corruption. We also show that connected firms do not perform better.
publishDate 2021
dc.date.none.fl_str_mv 2021
2021-01-01T00:00:00Z
2022-01-21T16:01:00Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/10451/50917
url http://hdl.handle.net/10451/50917
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv Alonso, M., Palma, N., Simon-Yarza, B. (2021). The value of political connections: Evidence from China's Anti-Corruption Campaign. CAGE working paper no. 558
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv CAGE Research Centre. Department of Economics, University of Warwick
publisher.none.fl_str_mv CAGE Research Centre. Department of Economics, University of Warwick
dc.source.none.fl_str_mv reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
instacron:RCAAP
instname_str Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
instacron_str RCAAP
institution RCAAP
reponame_str Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
collection Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
repository.name.fl_str_mv Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
repository.mail.fl_str_mv
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