The effect of regulating political connections: Evidence from China's board of directors ban |
| |
Authors: | Jijian Fan |
| |
Affiliation: | School of Economics, Zhejiang University, Hangzhou, China |
| |
Abstract: | There is a great deal of variation in how countries regulate the relationships between politicians and public-traded firms, but little evidence about how such policies affect firm performance. In 2013, China passed a new regulation that banned politicians from serving on the boards of directors of companies. Using a novel data set that links board members, government officials, and forced resignations, I estimate the effect of the policy on firm performance and stock returns. I find that the loss of a high-level politician significantly reduces a firm’s cumulative stock return and future profits. The effect is driven by officials from government-controlled public sectors and is larger when the firm is in low-marketized areas. The analysis provides important evidence about the efficacy of a commonly used policy tool for reducing political influence in the private sector. |
| |
Keywords: | |
本文献已被 ScienceDirect 等数据库收录! |
|