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Anti-corruption campaign and SOEs innovation: The role of the central inspection group in China

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  • Nie, Cong
  • Zhang, Xueren
  • Yang, Yue

Abstract

Using central inspections of China aimed at SOEs as a quasi-natural experiment, we investigate the causal effect of anti-corruption campaigns on the innovation of state-owned enterprises (SOEs). Based on the sample of China's SOEs, we find that the central inspections lead to an uplift in the quantity of SOE innovation at the expense of innovation quality. Further analysis indicates that owing to the unique motivation of political promotion, SOE managers improve the operation indicators valued by the government when subjected to political intervention in the shape of anti-corruption, such as the innovation quantity, referred to as the political monitoring mechanism. Eventually, there will be a decline in the quality of innovation that will supplement the long-term value of SOEs since the central inspection does not contribute to corporate governance.

Suggested Citation

  • Nie, Cong & Zhang, Xueren & Yang, Yue, 2024. "Anti-corruption campaign and SOEs innovation: The role of the central inspection group in China," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    • Handle: RePEc:eee:reveco:v:96:y:2024:i:pa:s1059056024005367
    DOI: 10.1016/j.iref.2024.103544
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    More about this item

    Keywords

    China'S SOEs; Central inspection group; Anti-corruption campaign; Innovation heterogeneity; Political monitoring effects;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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