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The value of political connections: Evidence from China's Anti-Corruption Campaign
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Orientador(es)
Resumo(s)
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.
Descrição
Palavras-chave
Board of directors Political connections China Misallocation
Contexto Educativo
Citação
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
Editora
CAGE Research Centre. Department of Economics, University of Warwick