Paragon or pariah? The consequences of being conspicuously rich in China's new economy

Michael FIRTH, Xianjie HE, Oliver M. RUI, Tusheng XIAO

Research output: Journal PublicationsJournal Article (refereed)

5 Citations (Scopus)

Abstract

In some cultures vast personal wealth is lauded whereas in others, it is viewed with suspicion and contempt. In recent years, a super rich elite of business people has emerged in China, and, given the country's cultural and socialist past, we believe that people are more likely to react negatively to reports of conspicuous wealth. To test our arguments, we examine the reactions to and consequences of China's entrepreneurs being included on the Hurun Rich List. We find negative consequences for stock market traded firms controlled by the Rich List entrepreneurs: stock prices decline, government subsidies are reduced, and the named entrepreneurs are more likely to be investigated. These effects are strongest in rent-seeking industries and are mitigated by philanthropy.
Original languageEnglish
Pages (from-to)430-448
Number of pages19
JournalJournal of Corporate Finance
Volume29
Early online date28 Sep 2014
DOIs
Publication statusPublished - Dec 2014

Fingerprint

Entrepreneurs
China
New economy
Wealth
Elites
Government subsidies
Rent-seeking
Philanthropy
Stock market
Suspicion
Stock prices
Industry

Keywords

  • Conspicuous wealth
  • Fairness
  • Market reaction
  • Government reaction
  • Philanthropy

Cite this

FIRTH, Michael ; HE, Xianjie ; RUI, Oliver M. ; XIAO, Tusheng. / Paragon or pariah? The consequences of being conspicuously rich in China's new economy. In: Journal of Corporate Finance. 2014 ; Vol. 29. pp. 430-448.
@article{0d6aa516ec9046b499c485ad89bec453,
title = "Paragon or pariah? The consequences of being conspicuously rich in China's new economy",
abstract = "In some cultures vast personal wealth is lauded whereas in others, it is viewed with suspicion and contempt. In recent years, a super rich elite of business people has emerged in China, and, given the country's cultural and socialist past, we believe that people are more likely to react negatively to reports of conspicuous wealth. To test our arguments, we examine the reactions to and consequences of China's entrepreneurs being included on the Hurun Rich List. We find negative consequences for stock market traded firms controlled by the Rich List entrepreneurs: stock prices decline, government subsidies are reduced, and the named entrepreneurs are more likely to be investigated. These effects are strongest in rent-seeking industries and are mitigated by philanthropy.",
keywords = "Conspicuous wealth, Fairness, Market reaction, Government reaction, Philanthropy",
author = "Michael FIRTH and Xianjie HE and RUI, {Oliver M.} and Tusheng XIAO",
year = "2014",
month = "12",
doi = "10.1016/j.jcorpfin.2014.09.004",
language = "English",
volume = "29",
pages = "430--448",
journal = "Journal of Corporate Finance",
issn = "0929-1199",
publisher = "Elsevier",

}

Paragon or pariah? The consequences of being conspicuously rich in China's new economy. / FIRTH, Michael; HE, Xianjie; RUI, Oliver M.; XIAO, Tusheng.

In: Journal of Corporate Finance, Vol. 29, 12.2014, p. 430-448.

Research output: Journal PublicationsJournal Article (refereed)

TY - JOUR

T1 - Paragon or pariah? The consequences of being conspicuously rich in China's new economy

AU - FIRTH, Michael

AU - HE, Xianjie

AU - RUI, Oliver M.

AU - XIAO, Tusheng

PY - 2014/12

Y1 - 2014/12

N2 - In some cultures vast personal wealth is lauded whereas in others, it is viewed with suspicion and contempt. In recent years, a super rich elite of business people has emerged in China, and, given the country's cultural and socialist past, we believe that people are more likely to react negatively to reports of conspicuous wealth. To test our arguments, we examine the reactions to and consequences of China's entrepreneurs being included on the Hurun Rich List. We find negative consequences for stock market traded firms controlled by the Rich List entrepreneurs: stock prices decline, government subsidies are reduced, and the named entrepreneurs are more likely to be investigated. These effects are strongest in rent-seeking industries and are mitigated by philanthropy.

AB - In some cultures vast personal wealth is lauded whereas in others, it is viewed with suspicion and contempt. In recent years, a super rich elite of business people has emerged in China, and, given the country's cultural and socialist past, we believe that people are more likely to react negatively to reports of conspicuous wealth. To test our arguments, we examine the reactions to and consequences of China's entrepreneurs being included on the Hurun Rich List. We find negative consequences for stock market traded firms controlled by the Rich List entrepreneurs: stock prices decline, government subsidies are reduced, and the named entrepreneurs are more likely to be investigated. These effects are strongest in rent-seeking industries and are mitigated by philanthropy.

KW - Conspicuous wealth

KW - Fairness

KW - Market reaction

KW - Government reaction

KW - Philanthropy

UR - http://commons.ln.edu.hk/sw_master/1625

UR - https://www.scopus.com/inward/record.uri?eid=2-s2.0-84908245390&doi=10.1016%2fj.jcorpfin.2014.09.004&partnerID=40&md5=3b25f76740e7ad7b2a5e5a1e7745a490

U2 - 10.1016/j.jcorpfin.2014.09.004

DO - 10.1016/j.jcorpfin.2014.09.004

M3 - Journal Article (refereed)

VL - 29

SP - 430

EP - 448

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

SN - 0929-1199

ER -