In the Shadows of the Government: Relationship Building during Political Turnovers

56 Pages Posted: 15 Dec 2018

See all articles by Hanming Fang

Hanming Fang

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Zhe Li

Renmin University of China

Nianhang Xu

Renmin University of China - School of Business

Hongjun Yan

DePaul University

Multiple version iconThere are 2 versions of this paper

Date Written: November 22, 2018

Abstract

We document that following a turnover of the Party Secretary or mayor of a city in China, firms (especially private firms) headquartered in that city significantly increase their “perk spending.” Both the instrumental-variable-based results and heterogeneity analysis are consistent with the interpretation that the perk spending is used to build relations with local governments. Moreover, local political turnover in a city tends to be followed by changes of Chairmen or CEOs of state-owned firms that are controlled by the local government. However, the Chairmen or CEOs who have connections with local government officials are less likely to be replaced.

Keywords: Government, Relationship, Political turnover, Perk, Personnel changes

JEL Classification: G30, G38

Suggested Citation

Fang, Hanming and Li, Zhe and Xu, Nianhang and Yan, Hongjun, In the Shadows of the Government: Relationship Building during Political Turnovers (November 22, 2018). Available at SSRN: https://ssrn.com/abstract=3288749 or http://dx.doi.org/10.2139/ssrn.3288749

Hanming Fang

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Zhe Li

Renmin University of China ( email )

Room B906
Xianjin Building
Beijing, Beijing 100872
China

Nianhang Xu

Renmin University of China - School of Business ( email )

Beijing
China

Hongjun Yan (Contact Author)

DePaul University ( email )

1 East Jackson Blvd.
Chicago, IL 60604
United States

HOME PAGE: http://sites.google.com/view/hongjunyan

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