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From past lies to current misconduct: The long shadow of China's Great Leap Forward

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  • Chen, Shuo
  • Ding, Haoyuan
  • Lin, Shu
  • Ye, Haichun

Abstract

Using hand-collected data on yield over-reporting during China's Great Leap Forward (GLF) period, we find that GLF over-reporting in a chairperson's province of origin strongly predicts corporate financial misconduct today. Evidence from a variety of identification strategies establishes a causal relationship. We also extend our analyses to other aspects of corporate misconduct and local dishonest behaviors. We show that GLF over-reporting has shifted social norms toward a present-day tolerance for dishonesty. Our findings suggest that wrongdoings by local government officials in the past can lead to adverse effects on people's future behavior in the form of cheating.

Suggested Citation

  • Chen, Shuo & Ding, Haoyuan & Lin, Shu & Ye, Haichun, 2022. "From past lies to current misconduct: The long shadow of China's Great Leap Forward," Journal of Development Economics, Elsevier, vol. 157(C).
    • Handle: RePEc:eee:deveco:v:157:y:2022:i:c:s0304387822000530
    DOI: 10.1016/j.jdeveco.2022.102888
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    1. Han, Xun & Hsu, Sara & Li, Jianjun & An, Ran, 2023. "Economic policy uncertainty, non-financial enterprises' shadow banking activities and stock price crash risk," Emerging Markets Review, Elsevier, vol. 54(C).

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    More about this item

    Keywords

    Dishonest behavior; Social norms; Corporate financial misconduct; Yield over-reporting; Great leap forward;
    All these keywords.

    JEL classification:

    • P37 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Legal
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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