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The value of local political capital in transition China

  • Sun, Pei
  • Xu, Haoping
  • Zhou, Jian
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    This paper documents stock market responses to the arrest of Shanghai's top leader by the Chinese central government in September 2006. The effects of personal-level and organizational-level connections to the local state are found to be negative and insignificant, respectively, on cumulative abnormal returns (CARs). Furthermore, companies having both personal and organizational political ties experienced the most adverse market reaction.

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    File URL: http://www.sciencedirect.com/science/article/B6V84-51GRWDP-5/2/5c70b11af4803a23d86fcc365d67acde
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    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 110 (2011)
    Issue (Month): 3 (March)
    Pages: 189-192

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    Handle: RePEc:eee:ecolet:v:110:y:2011:i:3:p:189-192
    Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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    1. Boubakri, Narjess & Cosset, Jean-Claude & Saffar, Walid, 2008. "Political connections of newly privatized firms," Journal of Corporate Finance, Elsevier, vol. 14(5), pages 654-673, December.
    2. Fan, Joseph P.H. & Wong, T.J. & Zhang, Tianyu, 2007. "Politically connected CEOs, corporate governance, and Post-IPO performance of China's newly partially privatized firms," Journal of Financial Economics, Elsevier, vol. 84(2), pages 330-357, May.
    3. Eitan Goldman & Jörg Rocholl & Jongil So, 2009. "Do Politically Connected Boards Affect Firm Value?," Review of Financial Studies, Society for Financial Studies, vol. 22(6), pages 2331-2360, June.
    4. Agrawal, Anup & Knoeber, Charles R, 2001. "Do Some Outside Directors Play a Political Role?," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 179-98, April.
    5. Faccio, Mara & Parsley, Davie, 2007. "Sudden Deaths: Taking Stock of Geographic Ties," MPRA Paper 6042, University Library of Munich, Germany.
    6. Tian, Guoqiang, 2000. "Property Rights and the Nature of Chinese Collective Enterprises," Journal of Comparative Economics, Elsevier, vol. 28(2), pages 247-268, June.
    7. Li, Hongbin & Meng, Lingsheng & Wang, Qian & Zhou, Li-An, 2008. "Political connections, financing and firm performance: Evidence from Chinese private firms," Journal of Development Economics, Elsevier, vol. 87(2), pages 283-299, October.
    8. Fan, Joseph P.H. & Rui, Oliver Meng & Zhao, Mengxin, 2008. "Public governance and corporate finance: Evidence from corruption cases," Journal of Comparative Economics, Elsevier, vol. 36(3), pages 343-364, September.
    9. Charles Calomiris & Raymond Fisman & Yongxiang Wang, 2008. "Profiting from Government Stakes in a Command Economy: Evidence from Chinese Asset Sales," NBER Working Papers 13774, National Bureau of Economic Research, Inc.
    10. Jiang, Guohua & Lee, Charles M.C. & Yue, Heng, 2010. "Tunneling through intercorporate loans: The China experience," Journal of Financial Economics, Elsevier, vol. 98(1), pages 1-20, October.
    11. Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March.
    12. Zhou, Wubiao, 2009. "Bank Financing in China's Private Sector: The Payoffs of Political Capital," World Development, Elsevier, vol. 37(4), pages 787-799, April.
    13. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
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