What is it about?
This article investigates the effects of an anti-corruption campaign on firm value by testing market reactions to the investigation of top local officials during the recent anti-corruption campaign in China. We find that the anti-corruption events are more likely to be bad news for the market values of local state-owned enterprises (SOEs) but good news for the market values of non-SOEs less dependent on political connections. Besides, anti-corruption events are also more likely to be bad news for firms in regulated industries or low-marketization regions but good news for firms in nonregulated industries or high-marketization regions.
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Why is it important?
This article provides more general evidence on the effect of anti-corruption campaign on firm value by investigating the heterogeneous market reactions of the local firms to the investigation of corrupted local top government officials.
Perspectives
Writing this article was a great pleasure as it has co-authors with whom I have had long standing collaborations. More than anything else, and if nothing else, I hope you find this article thought-provoking.
Jinsong Liu
Tsinghua University
Read the Original
This page is a summary of: Anti-corruption campaign in China: good news or bad news for firm value?, Applied Economics Letters, November 2017, Taylor & Francis,
DOI: 10.1080/13504851.2017.1406651.
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