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Anti-corruption campaigns and corporate information release in China

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  • Cao, Xiaping
  • Wang, Yuchen
  • Zhou, Sili

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 et al. (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.

Suggested Citation

  • Cao, Xiaping & Wang, Yuchen & Zhou, Sili, 2018. "Anti-corruption campaigns and corporate information release in China," Journal of Corporate Finance, Elsevier, vol. 49(C), pages 186-203.
    • Handle: RePEc:eee:corfin:v:49:y:2018:i:c:p:186-203
    DOI: 10.1016/j.jcorpfin.2018.01.008
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