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Mandatory Resignation of Politician-Directors and Company Violations: Evidence from China

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  • Chuan Zhang
  • Jie Liu

Abstract

This study analyzes whether the loss of political connections in Chinese listed firms affects the incidence of company violations. Using the partially observable bivariate probit model, the results indicate that the mandatory resignation of politician-directors is 1) negatively related to ex ante violation tendency and 2) positively associated with ex post violation detection. Moreover, this effect emerges as more pronounced when the politician-directors in question are senior officials, incumbent officeholders, or those whose administrative jurisdiction includes the listed companies they serve. Combined, these findings provide a new perspective from which management can effectively govern companies.

Suggested Citation

  • Chuan Zhang & Jie Liu, 2022. "Mandatory Resignation of Politician-Directors and Company Violations: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(13), pages 3651-3663, October.
    • Handle: RePEc:mes:emfitr:v:58:y:2022:i:13:p:3651-3663
    DOI: 10.1080/1540496X.2022.2063047
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