Anti-Corruption Campaigns and Corporate Information Release in China

18 Pages Posted: 24 Feb 2018

See all articles by Xiaping Cao

Xiaping Cao

SUN YAT-SEN UNIVERSITY

Yuchen Wang

Department of Statistics and Finance, University of Science and Technology of China

Sili Zhou

Fanhai International School of Finance and School of Economics, Fudan University

Date Written: December 4, 2017

Abstract

Chinese anti-corruption campaigns executed by CCDI (Central Commission for Discipline Inspection) put politicians under high scrutiny. We employ CCDI’s inspections as the event and use counterfactual analysis to show that corporations in inspected provinces significantly suppress negative information release evidenced by stock prices following Chen, Hong, and Stein (2001). The variation of political maneuvers to suppress negative information release is consistent with local politician’s influences and incentives in affiliated firms, e.g., SOEs or politically connected non-SOEs. SOEs continue to suppress negative information release while non-SOEs experience mean-reversion after inspections. Good governance and auditor’s quality partially mitigate manager’s incentives to suppress bad news.

Keywords: China, Information Release, Anti-Corruption Campaign, Event Study, CCDI, Corporate Governance

Suggested Citation

Cao, Xiaping and Wang, Yuchen and Zhou, Sili, Anti-Corruption Campaigns and Corporate Information Release in China (December 4, 2017). Journal of Corporate Finance, Vol. 49C, No. 186-203, 2018, Available at SSRN: https://ssrn.com/abstract=3129219

Xiaping Cao

SUN YAT-SEN UNIVERSITY ( email )

135 Xingang Xi Road
Guangzhou, 510275
China
+862084111154 (Phone)

Yuchen Wang (Contact Author)

Department of Statistics and Finance, University of Science and Technology of China ( email )

96, Jinzhai Road
Hefei, Anhui 230026
China

HOME PAGE: http://en.business.ustc.edu.cn/

Sili Zhou

Fanhai International School of Finance and School of Economics, Fudan University ( email )

Room 520, Building 5, 220 Handan Road
Shanghai
China

HOME PAGE: http://siliz.weebly.com/

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