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Effects of anti-corruption on firm performance: Evidence from a quasi-natural experiment in China

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  • Kong, Dongmin
  • Wang, Li
  • Wang, Maobin

Abstract

We investigate the causal effects of anti-corruption on firm performance based on a quasi-natural experiment. Since 2013, China has implemented a national anti-corruption policy, and the Central Commission for Discipline Inspection has conducted five rounds of inspection on corruption covering all provinces. Difference-in-differences estimations show that although the anti-corruption campaign significantly improves firm performance of central state-owned enterprises (SOEs), such endeavor significantly reduces firm performance of non-state-owned enterprises (non-SOEs). Thus, the corruption could a double-edged sword and act as “sand-the-wheel” in central SOEs but “greasing-the-wheel” in non-SOEs. This paper provides critical insights and a serious challenge for regulators in China.

Suggested Citation

  • Kong, Dongmin & Wang, Li & Wang, Maobin, 2017. "Effects of anti-corruption on firm performance: Evidence from a quasi-natural experiment in China," Finance Research Letters, Elsevier, vol. 23(C), pages 190-195.
    • Handle: RePEc:eee:finlet:v:23:y:2017:i:c:p:190-195
    DOI: 10.1016/j.frl.2017.05.011
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    Cited by:

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    11. Khanh Hoang & Hieu T. Doan & Thanh T. Tran & Thang X. Nguyen & Anh Q. Le, 2022. "Anti-Corruption Campaign and Firm Financial Performance: Evidence From Vietnam Firms," Evaluation Review, , vol. 46(2), pages 103-137, April.
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    16. Tao, Miaomiao & Dagestani, Abd Alwahed & Goh, Lim Thye & Zheng, Yuhang & Le, Wen, 2023. "Do China's anti-corruption efforts improve corporate productivity? A difference-in-difference exploration of Chinese listed enterprises," Socio-Economic Planning Sciences, Elsevier, vol. 87(PB).
    17. Xie, Jun & Zhang, Yifan, 2020. "Anti-corruption, government intervention, and corporate cash holdings: Evidence from China," Economic Systems, Elsevier, vol. 44(1).
    18. Xiong, Yan & Zhao, Yan, 2021. "Guanxi, media coverage and IPO approvals: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 65(C).
    19. Shenghui Tong, 2022. "Corruption and anti‐corruption in China: a review and future research agenda," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 36(1), pages 3-16, May.
    20. Kong, Gaowen & Huang, Jiating & Ma, Guangyuan, 2023. "Anti-corruption and within-firm pay gap: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    21. Wang, Huanming & Ma, Liang, 2019. "Ownership, corruption, and revenue regimes for infrastructure partnerships: Evidence from China," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.
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    24. Qian, Ningyu, 2018. "Anti-corruption effects on the credit risk of local financing vehicles and the pricing of Chengtou bonds: Evidence from a quasi-natural experiment in China," Finance Research Letters, Elsevier, vol. 26(C), pages 162-168.

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    More about this item

    Keywords

    Corruption; Central inspection teams; Quasi-natural experiment; Firm performance;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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