Anti-corruption reforms and shareholder valuations : event study evidence from China

Chen LIN, Randall MORCK, Bernard YEUNG, Xiaofeng ZHAO

Research output: Working paperWorking paper series


Consistent with reduced expected corruption adding value overall, Chinese shares rise sharply on the December 4th 2012 launch of major anti-corruption reforms, which started by curtailing extravagant spending by or for Party cadres. SOEs gain broadly, consistent with the reform cutting their top managers’ (all Party cadres) spending on private benefits. NonSOEs gain in more liberalized provinces, consistent with reduced expected bribes to officials (also Party cadres) for getting business done. NonSOEs lose in provinces where market institutions remain weak, consistent with bribes for “greasing bureaucratic gears” still being a key resource allocation mechanism there. Firm level regressions reveal more productive nonSOEs in more growth potential and external finance-dependent industries gaining more in more liberalized provinces, consistent with investors expecting reduced corruption to complement and perhaps intensify the development of market institutions.

Original languageEnglish
Place of PublicationMassachusetts
PublisherNational Bureau of Economic Research
Number of pages64
Publication statusPublished - Feb 2016
Externally publishedYes

Publication series

NameNBER Working Paper Series
PublisherNational Bureau of Economic Research

Bibliographical note

Presented at Stigler Center for the Study of Economy and the State (Chicago Booth, Dec 2016), The 2nd China-Europe Conference: Transparency Economic Institutions and Governance (2016), The 2016 Greater China Area Finance Conference, the ABFER 2016, NBER’s May 2015 China Economy workshop, CJAR (2014), and the HKMA (2014).

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