, Anders C. Johansson
() and Tianyu Zhang
Xunan Feng: Shanghai University
Anders C. Johansson: Stockholm China Economic Research Institute
Tianyu Zhang: Chinese University of Hong Kong
Abstract: We study how Chinese private entrepreneurs benefit from participating in politics. Using original hand-collected data on listed firms controlled by private entrepreneurs, we document a significant positive relationship between political participation and change in firm performance. We also provide evidence that the change in social status cannot explain the change in performance. We then identify several ways through which firms gain preferential treatment when the controlling entrepreneur participates in politics: better access to debt financing, preferential tax treatment, more government subsidies, and superior access to regulated industries.
63 pages, December 17, 2013
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