Anti-corruptions and IPO Decision: Evidence from the Chinese Provincial Panel Data

Abstract

Relationship between IPOs and Local political turnover has been disputed and studied (Piotroski and Zhang (2014)). In this paper, we further focus on the anti-corruption and IPOs, since 2012 Chairman Xi announced and conducted a series of action of "hit the tiger" in order to reduce the anti-corruption and pure discipline in CPC. By examining and testing provincial panel data, we found the demotion of provincial officials can affect IPO decisions of Chinese companies that are eligible to list, those who take advantage of the window where companies lose political connections can lead to certain resource allocation inefficiencies. Additionally, firms performance and ownership could also be influenced by such demotion and anti-corruption.