How has the anti-corruption campaign affected operational efficiency? Evidence from a quasi-natural experiment in China

Leveraging China’s anti-corruption campaign as a quasi-natural experiment, this paper uses a panel data set comprising all Chinese listed firms over the period from 2008 to 2018.We employ dynamic difference-in-differences estimation to investigate the causal effect of the Chinese government’s anti-corruption campaign on firm operational efficiency. Our empirical evidence supports the notion that the anti-corruption campaign can enhance firm operational efficiency significantly (by approximately 7%). Drawing upon the theoretical framework of the attention-based view, we further examine the moderating effects of political connections, regional market development and corporate social responsibility performance. Our empirical results align with the attention-based view and indicate that these moderating factors collectively undermine firms’ operational efficiency by diverting management attention. Our study contributes to the literature by investigating the impact of an improved institutional environment on firm operational performance and by expanding the scope of the attention-based view. In addition, we provide essential insights for policy makers, emphasizing the importance of comprehensive anti-corruption measures, and we offer decision makers valuable insights into prioritizing operational activities.