IDEAS home Printed from https://ideas.repec.org/a/eee/pacfin/v99y2026ics0927538x26001824.html

Navigating the tides of change: The impact of corporate government policy alignment on firm performance

Author

Listed:
  • Wang, Ningzhi
  • Zhu, Xinyu
  • Gu, Yunyang
  • Liu, Ying
  • Zhang, Jian

Abstract

We develop a dynamic measure of corporate policy alignment using textual similarity between firms' annual reports and municipal government work reports in China. We find that firms closely aligning their strategic narratives with local policy priorities exhibit significantly superior financial performance. This performance premium is primarily driven by increased government subsidies and reduced debt financing costs. Topic-level decomposition reveals substantial heterogeneity: alignment with resource-allocating mandates such as Technology, Industrial Policy, and Energy & Infrastructure enhances firm value, whereas alignment with regulatory constraints like Financial Oversight imposes costly compliance burdens. Furthermore, policy alignment improves corporate investment efficiency and innovation output. Overall, our findings suggest that proactive policy coherence provides competitive advantages beyond traditional political connections.

Suggested Citation

  • Wang, Ningzhi & Zhu, Xinyu & Gu, Yunyang & Liu, Ying & Zhang, Jian, 2026. "Navigating the tides of change: The impact of corporate government policy alignment on firm performance," Pacific-Basin Finance Journal, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:pacfin:v:99:y:2026:i:c:s0927538x26001824
    DOI: 10.1016/j.pacfin.2026.103236
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927538X26001824
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.pacfin.2026.103236?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    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:eee:pacfin:v:99:y:2026:i:c:s0927538x26001824. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/pacfin .

    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.