How does the turnover of local officials make firms more charitable? A comprehensive analysis of corporate philanthropy in China

Abstract

Building on institutional theory, this study investigates the impact of local officials' turnover on corporate philanthropy in China. Using data from Chinese listed firms from 2000–2015, we find that when city-level officials are replaced, firms increase the amount of money they donate. We also note that such positive relationship is stronger when the turnover of a local secretary is unexpected or when the firm experiences stronger performance than in the prior year. Further in-depth analysis shows that the positive impact of the turnover of local officials becomes more salient when firms have high levels of state ownership.