Political Turnover and the Stock Performance of SOEs in China

Wang, Danli and Chong, Terence Tai Leung (2015): Political Turnover and the Stock Performance of SOEs in China.

Abstract

This paper analyses the reasons behind the long-term underperformance of China's stock market. We argue that the price growth of local state-owned enterprises (SOEs) is hindered by the control of state shares by local cadres, who often sell the shares below market prices during their time in office. Our empirical analysis reveals that political turnover of prefectural Party Secretary has a significantly negative impact on the selling of state-owned shares and the price growth of local state-owned enterprises, while there is no such impact on private enterprises and state-owned enterprises controlled by the central government.

• Item Type: MPRA Paper
• Language: English
• Keywords: Political turnover; State-owned enterprises; Local cadres.
• Subjects: G - Financial Economics > G1 - General Financial Markets; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; P - Economic Systems > P2 - Socialist Systems and Transitional Economies

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