Do checks on bureaucrats improve firm value?: Evidence from a natural experiment

Jiafu An; Seth Armitage; Wenxuan Hou; Xianda Liu

doi:10.1111/acfi.12705

Do checks on bureaucrats improve firm value? Evidence from a natural experiment

Jiafu An
, Seth Armitage
, Wenxuan Hou^* (Corresponding Author)
, Xianda Liu

^*Corresponding author for this work

Accountancy & Finance, Finance

University of Edinburgh
Shanghai Lixin University of Accounting and Finance
Chinese Academy of Social Sciences

Research output: Contribution to journal › Article › peer-review

11 Citations (Scopus)

17 Downloads (Pure)

Abstract

This paper studies the impact on firm value of tighter checks on bureaucrats? behaviour. We use as a natural experiment the revision in 2015 by the Communist Party of China (CPC) of its regulations on disciplinary actions. We document a positive and substantial market reaction following this unexpected policy change that tightened and formalised constraints on bureaucrats? misconduct. The impact is less pronounced for firms with state ownership, firms having CEOs or directors with CPC membership, and firms that operate in provinces with better institutional quality. The subsequent revision in 2018 that enforced political obedience is not associated with a positive market reaction.

Original language	English
Pages (from-to)	4821-4844
Number of pages	24
Journal	Accounting & Finance
Volume	60
Issue number	5
Early online date	28 Sept 2020
DOIs	https://doi.org/10.1111/acfi.12705
Publication status	Published - 31 Dec 2020

Keywords

anti-corruption
bureaucratic checks
China
firm value
natural experiment

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10.1111/acfi.12705Licence: CC BY-NC-ND

An_etal_AF_Do_Checks_On_VoR
© 2020 The Authors. Accounting & Finance published by John Wiley & Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand This is an open access article under the terms of the Creative Commons Attribution-NonCommercialNoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made. https://creativecommons.org/licenses/by-nc-nd/4.0/
Final published version, 309 KBLicence: CC BY-NC-ND

Cite this

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Do checks on bureaucrats improve firm value? Evidence from a natural experiment

Abstract

Keywords

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