In the Shadows of the Government: Relationship Building during Political Turnovers
51 Pages Posted: 15 Dec 2018 Last revised: 5 Oct 2020
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In the Shadows of the Government: Relationship Building during Political Turnovers
In the Shadows of the Government: Relationship Building During Political Turnovers
Date Written: October 4, 2020
Abstract
We document that following a turnover of the Party Secretary or mayor of a city in China, firms (especially private firms) headquartered in that city significantly increase their “perk spending.” Both the instrumental-variable-based results and heterogeneity analysis are consistent with the interpretation that the perk spending is used to build relations with local governments. Moreover, local political turnover in a city tends to be followed by changes of Chairmen or CEOs of state-owned firms that are controlled by the local government. However, the Chairmen or CEOs who have connections with local government officials are less likely to be replaced.
Keywords: Government, Relationship, Political turnover, Perk, Personnel changes
JEL Classification: G30, G38
Suggested Citation: Suggested Citation