Crony capitalism through political distortions amongst publicly listed firms in China
This final year project examines for evidence of crony capitalism in China by investigating if politically distorted firms receive lower cost of capital. We make use the detailed information of publicly listed firms in China’s stock market over the period of 2008 to 2015. Political distortions are c...
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| Format: | Final Year Project (FYP) |
| Language: | English |
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Nanyang Technological University
2020
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/139694 |
| _version_ | 1811677094365626368 |
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| author | Liew, Andy He Wen Foo, Zen Yu Jie Lee, Lucas Guan Yi |
| author2 | Wu Guiying Laura |
| author_facet | Wu Guiying Laura Liew, Andy He Wen Foo, Zen Yu Jie Lee, Lucas Guan Yi |
| author_sort | Liew, Andy He Wen |
| collection | NTU |
| description | This final year project examines for evidence of crony capitalism in China by investigating if politically distorted firms receive lower cost of capital. We make use the detailed information of publicly listed firms in China’s stock market over the period of 2008 to 2015. Political distortions are captured through two measures: (1) firm ownership type, as standard in the existing literature; and (2) political connection of top management, a novel contribution of this research. Our identification comes from two sources. First, using a fixed-effect model, we find that all else being equal, state-owned enterprises and chairperson political connections lower a firm’s cost of capital. Second, from a difference-in-difference strategy, we find that during China’s 2008 stimulus, state-owned enterprises crony capitalistic benefits intensified through even lower cost of capital. These findings are important as such capital misallocation lowers China’s total factor productivity. |
| first_indexed | 2024-10-01T02:31:54Z |
| format | Final Year Project (FYP) |
| id | ntu-10356/139694 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T02:31:54Z |
| publishDate | 2020 |
| publisher | Nanyang Technological University |
| record_format | dspace |
| spelling | ntu-10356/1396942020-05-21T03:11:09Z Crony capitalism through political distortions amongst publicly listed firms in China Liew, Andy He Wen Foo, Zen Yu Jie Lee, Lucas Guan Yi Wu Guiying Laura School of Social Sciences guiying.wu@ntu.edu.sg Social sciences::Economic development::China This final year project examines for evidence of crony capitalism in China by investigating if politically distorted firms receive lower cost of capital. We make use the detailed information of publicly listed firms in China’s stock market over the period of 2008 to 2015. Political distortions are captured through two measures: (1) firm ownership type, as standard in the existing literature; and (2) political connection of top management, a novel contribution of this research. Our identification comes from two sources. First, using a fixed-effect model, we find that all else being equal, state-owned enterprises and chairperson political connections lower a firm’s cost of capital. Second, from a difference-in-difference strategy, we find that during China’s 2008 stimulus, state-owned enterprises crony capitalistic benefits intensified through even lower cost of capital. These findings are important as such capital misallocation lowers China’s total factor productivity. Bachelor of Arts in Economics 2020-05-21T03:11:09Z 2020-05-21T03:11:09Z 2020 Final Year Project (FYP) https://hdl.handle.net/10356/139694 en HE_1AY1920_3 application/pdf Nanyang Technological University |
| spellingShingle | Social sciences::Economic development::China Liew, Andy He Wen Foo, Zen Yu Jie Lee, Lucas Guan Yi Crony capitalism through political distortions amongst publicly listed firms in China |
| title | Crony capitalism through political distortions amongst publicly listed firms in China |
| title_full | Crony capitalism through political distortions amongst publicly listed firms in China |
| title_fullStr | Crony capitalism through political distortions amongst publicly listed firms in China |
| title_full_unstemmed | Crony capitalism through political distortions amongst publicly listed firms in China |
| title_short | Crony capitalism through political distortions amongst publicly listed firms in China |
| title_sort | crony capitalism through political distortions amongst publicly listed firms in china |
| topic | Social sciences::Economic development::China |
| url | https://hdl.handle.net/10356/139694 |
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