Poverty mitigation and anti-corruption campaigns: evidence from Chinese cities

Abstract

In China, firms actively participate in poverty alleviation to comply with the national policy and to build political connections. Whether firms curry favor with the government by increasing spending on poverty alleviation is an interesting research question under the context of anti-corruption campaigns. Using hand-collected data from the period 2016–2018, we examine how anti-corruption campaigns have influenced corporate poverty alleviation spending at the city level. Our results show that anti-corruption campaigns are positively related to corporate poverty alleviation spending. We further identify two possible channels through which the anti-corruption campaign increases corporate poverty alleviation spending: (1) political connections and (2) stock price crash risk. Finally, we find that the effects of the anti-corruption campaign on corporate poverty alleviation spending are stronger in firms located in cities with lower degrees of marketization, a lower media index, and a higher poverty rate, as well as in firms receiving fewer government subsidies.