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Government protection, political connection and management turnover in China

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  • Cheng, Louis T.W.
  • Leung, T.Y.

Abstract

Mainland Chinese government employs two related strategies to protect its national and economic interests in the process of financial liberalization. It grants government protection to industries of national interest. In addition, it also maintains political-linkage with certain firms to assert their influence. We term these firms as strategic firms. We argue these strategic firms with economic and national interests demonstrate better performance and higher management turnovers. Management turnovers are less frequent if the chairpersons and CEOs are politically-connected. The strategic firms also rebound better from financial distress than non-strategic firms.

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  • Cheng, Louis T.W. & Leung, T.Y., 2016. "Government protection, political connection and management turnover in China," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 160-176.
    • Handle: RePEc:eee:reveco:v:45:y:2016:i:c:p:160-176
    DOI: 10.1016/j.iref.2016.03.010
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    Cited by:

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    5. Fawad Rauf & Cosmina L. Voinea & Khwaja Naveed & Cosmin Fratostiteanu, 2021. "CSR Disclosure: Effects of Political Ties, Executive Turnover and Shareholder Equity. Evidence from China," Sustainability, MDPI, vol. 13(7), pages 1-18, March.
    6. Ge, Yuanjing & Guo, Haifeng & Fung, Hung-Gay & Guang, Kuncheng, 2019. "CEO effects on the IPO market under different policy regimes: Evidence from the Chinese SME board," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 163-175.
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    More about this item

    Keywords

    Political connection; Government protection; Management turnover; Strategic firm;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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