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Corruption exposure, political disconnection, and their impact on Chinese family firms

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  • Song, Siwen
  • Jun, Aelee
  • Ma, Shiguang

Abstract

This study adopts a quasi-natural experimental approach to examine the responses of Chinese family firms to political disconnection following exposure to corruption scandals. Our results are consistent with the view that family firms build political connections to achieve better performance, for access to external financing, and to secure more investment opportunities. We also find that the impact of political disconnection is more profound for firms located in provinces with a low level of marketisation, located in the same provinces as their related corrupt officials, and belonging to industries with high levels of corruption. Our results are robust after ruling out the impact of corruption cases per se as well as to alternative measurements of key variables and sample selection methods.

Suggested Citation

  • Song, Siwen & Jun, Aelee & Ma, Shiguang, 2021. "Corruption exposure, political disconnection, and their impact on Chinese family firms," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(3).
    • Handle: RePEc:eee:jocaae:v:17:y:2021:i:3:s1815566921000242
    DOI: 10.1016/j.jcae.2021.100266
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    More about this item

    Keywords

    Political connection; Corruption; Family firms; Corporate behaviour;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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