GDP Management to Meet or Beat Growth Targets

53 Pages Posted: 18 Mar 2015 Last revised: 21 Jul 2018

See all articles by Lyu Changjiang

Lyu Changjiang

Fudan University - School of Management

Kemin Wang

Fudan University - School of Management

Frank Zhang

Yale School of Management

Zhang Xin

Fudan University - School of Management

Date Written: July 11, 2018

Abstract

We apply the discontinuity methodology from the accounting literature to a political economy setting of GDP reporting and examine whether Chinese local governments manage regional GDP numbers. We find strong evidence of discontinuities around zero in the distribution of actual minus target GDP growth rates. The frequencies of just meeting or beating GDP growth targets are about five (four) times the frequencies of just missing targets at the prefecture (province) level. The results are stronger for governors with longer tenures and those without political connections to higher-level officials as well as for local governments with more resources under their control.

Keywords: GDP growth, earnings management, political economy, discontinuity, forecast error

JEL Classification: E23, M41, M48, O11, R11

Suggested Citation

Changjiang, Lyu and Wang, Kemin and Zhang, Frank and Xin, Zhang, GDP Management to Meet or Beat Growth Targets (July 11, 2018). Journal of Accounting & Economics (JAE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2579824 or http://dx.doi.org/10.2139/ssrn.2579824

Lyu Changjiang

Fudan University - School of Management ( email )

No. 670, Guoshun Road
No.670 Guoshun Road
Shanghai, 200433
China

Kemin Wang

Fudan University - School of Management ( email )

No. 670, Guoshun Road
Shanghai, 200433
China

Frank Zhang (Contact Author)

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

Zhang Xin

Fudan University - School of Management ( email )

No. 670, Guoshun Road
No.670 Guoshun Road
Shanghai, 200433
China

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