IDEAS home Printed from https://ideas.repec.org/p/cge/wacage/558.html
   My bibliography  Save this paper

The Value of Political Connections: Evidence from China's Anti-Corruption Campaign

Author

Listed:
  • Alonso, Marta

    (University of Navarra)

  • Palma, Nuno

    (University of Manchester; Instituto de Ciencias Sociais, Universidade de Lisboa; CEPR & CAGE)

  • Simon-Yarza, Beatriz

    (University of Navarra)

Abstract

We study the value of the political connections of directors on Chinese boards. We build a new dataset that measures connections of directors to members of the Politburo via past school ties, and find that private firms with politically connected directors in the boardroom get on average about 20% higher subsidies over sales (8.52 million yuan). Connected state-owned enterprises access debt at 10% cheaper cost, which translates into 27.8 million yuan lower interest payment on average. We find that the value of the political connections persisted after the Anti-Corruption Campaign of 2012. It became weaker for the cost of debt in state-owned enterprises, but stronger for subsidies to private firms. We argue that the value of connections in the private sector increased after the Anti-Corruption Campaign because they are a less risky alternative to corruption.

Suggested Citation

  • Alonso, Marta & Palma, Nuno & Simon-Yarza, Beatriz, 2021. "The Value of Political Connections: Evidence from China's Anti-Corruption Campaign," CAGE Online Working Paper Series 558, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:558
    as

    Download full text from publisher

    File URL: https://warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/wp558.2021.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    Board of directors; Political connections; China; Corruption JEL Classification: G3; H0; O1; P2;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • H0 - Public Economics - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cge:wacage:558. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jane Snape (email available below). General contact details of provider: https://edirc.repec.org/data/dewaruk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.