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Political connections of Chinese fund management companies and fund performance

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  • Chao He
  • Lawrence Kryzanowski
  • Yunfei Zhao

Abstract

This study uses hand‐collected information on shareholders’ backgrounds of mutual funds and their fund management companies (FMCs), and administrative and criminal penalties for insider trading as the proxy of government regulation intensity. We fill a gap in the literature by identifying a positive relationship between funds’ performance and the proportion of state‐owned FMC ownership that becomes negative when the Chinese government increased its regulatory effort to reduce informational advantages from political connections obtained through this ownership channel. Results are robust using DiD and IV analyses, placebo tests, propensity score matching, Oster test for missing covariates, channel tests, and alternate ownership classifications.

Suggested Citation

  • Chao He & Lawrence Kryzanowski & Yunfei Zhao, 2023. "Political connections of Chinese fund management companies and fund performance," The Financial Review, Eastern Finance Association, vol. 58(3), pages 597-627, August.
    • Handle: RePEc:bla:finrev:v:58:y:2023:i:3:p:597-627
    DOI: 10.1111/fire.12334
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