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Effects of anti-corruption on firm performance: Evidence from a quasi-natural experiment in China

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  • Kong, Dongmin
  • Wang, Li
  • Wang, Maobin

Abstract

We investigate the causal effects of anti-corruption on firm performance based on a quasi-natural experiment. Since 2013, China has implemented a national anti-corruption policy, and the Central Commission for Discipline Inspection has conducted five rounds of inspection on corruption covering all provinces. Difference-in-differences estimations show that although the anti-corruption campaign significantly improves firm performance of central state-owned enterprises (SOEs), such endeavor significantly reduces firm performance of non-state-owned enterprises (non-SOEs). Thus, the corruption could a double-edged sword and act as “sand-the-wheel” in central SOEs but “greasing-the-wheel” in non-SOEs. This paper provides critical insights and a serious challenge for regulators in China.

Suggested Citation

  • Kong, Dongmin & Wang, Li & Wang, Maobin, 2017. "Effects of anti-corruption on firm performance: Evidence from a quasi-natural experiment in China," Finance Research Letters, Elsevier, vol. 23(C), pages 190-195.
    • Handle: RePEc:eee:finlet:v:23:y:2017:i:c:p:190-195
    DOI: 10.1016/j.frl.2017.05.011
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    References listed on IDEAS

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    More about this item

    Keywords

    Corruption; Central inspection teams; Quasi-natural experiment; Firm performance;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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