The Value of Political Connections: Chinese Evidence
We investigate the value of political connections to Chinese companies using a sample of companies registered in Shanghai during the Shanghai Social Security Fund scandal. Shanghai Social Security Fund scandal was a major Chinese scandal in 2006, which brought down Chen Liangyu -- the top official in Shanghai. Around 72％ of the 137 companies registered in Shanghai are either controlled by the Shanghai government or having board member with career experience in Shanghai Government. These firms suffered on average -2.21％ abnormal returns during the five days surrounding the disclosure of Chen Liangyus dismissal. Around 54％ of the 137 companies registered in Shanghai are controlled by the Shanghai government. These firms suffered on average -2.23％ abnormal returns during the five days surrounding the disclosure of Chen Liangyus dismissal. Around 64％ of these 137 companies have a board member with career experience of Shanghai government. These firms suffered on average -2.38％ abnormal returns during the five days surrounding the disclosure of the dismissal of Chen Liangyu. We further classify firms controlled by Shanghai government as firms with explicit political connections and firms having board member(s) with career experience of Shanghai government as firms with implicit political connections. The regression results show that firms with implicit political connections have experienced more severe market reaction around the disclosure of Chen Liangyus dismissal.
political connection government ownership Shanghai social security
XU Haoping ZHOU Jian
School of Management, Fudan University, Shanghai, China, 200433 School of Management, SUNY at Binghamton, PO Box 6000, Binghamton, NY 13902-6000
国际会议
大连
英文
1-8
2009-06-29（万方平台首次上网日期，不代表论文的发表时间）