Abstract
This study identifies and decomposes the impact of China’s central anti-corruption on Macau’s gaming industry by examining the quarter revenue data of six gaming companies from 2010 to the third quarter of 2017. The analysis results show that the negative impact of the anti-corruption campaign on the revenue of Macau’s gaming industry is lagging behind, and the strengthening of anti-corruption efforts since the establishment of the 18th Central Committee of the Communist Party of China has caused clear externality. The effect remains significant after excluding the influences of macroeconomic factors, the Brazilian World Cup, and the Asia gaming industry competition. For the impact mechanism, the effect is mainly determined through the per capita gaming of Macau visitors instead of the number of gamers. This study provides empirical support for research on the externality of anti-corruption.
Highlights
With the continuous improvement of mainland China’s overall strength and deepening exchanges amongst regional economies, the anti-corruption within has deepened its influence on the surrounding economy through several channels
What is the effect of the central anti-corruption on Macau’s gaming industry? How does this externality happen? Are the externalities significant since the establishment of the Communist Party of China’s 18th National Congress? The present study aims to answer these questions based on data obtained from six gaming companies in Macau from 2010 to the third quarter of 2017
In Equation (1), the explained variable log (TR )it represents the logarithm of the gaming company’s revenue i at time t; the core explanatory variable vector is the measure of anti-corruption intensity, AC, and we will construct it from Drop and CP. αi reflects the gaming companies individual firmness and is used to control the individual heterogeneity of the gaming company; θ Year and θ Quarter are the fixed effects of the year and the fixed effects of the quarter and are used to control the revenue growth’s impact of Macau gaming company over time; εit represent the random error term
Summary
With the continuous improvement of mainland China’s overall strength and deepening exchanges amongst regional economies, the anti-corruption within has deepened its influence on the surrounding economy through several channels. We find that analyzing the impact of the central anti-corruption on Macau’s gaming industry can provide empirical support for anti-corruption externality research. When the central government promotes anti-corruption efforts, the relative number of gamers from mainland China decreases due to censorship or deterrent effect. The anti-corruption in the mainland has been strengthened since 2014, causing a decline in the gross gaming revenue of Macau’s gaming industry. Statistics show that in the second, third and fourth quarters of 2014, the revenue of luxury lounges, which account for more than 70% of Macau’s gaming industry, dropped 6%, 19% and 29%, respectively, over the previous year’s figures.. What is the effect of the central anti-corruption on Macau’s gaming industry? What is the effect of the central anti-corruption on Macau’s gaming industry? How does this externality happen? Are the externalities significant since the establishment of the Communist Party of China’s 18th National Congress? The present study aims to answer these questions based on data obtained from six gaming companies in Macau from 2010 to the third quarter of 2017
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