Turnover Of Officials Research Articles

Decoding the impact of political uncertainty on IPO underpricing in China

PurposePolitical factors play a crucial role in China's initial public offering (IPO) market due to its distinctive institutional context (i.e. “economic decentralization” and “political centralization”). Given the significant level of IPO underpricing in China, we examine the impact of local political uncertainty (measured by prefecture-level city official turnover rate) on IPO underpricing.Design/methodology/approachUsing 2,259 IPOs of A-share listed companies from 2001 to 2019, we employ a structural equation model (SEM) to examine the channel (voluntarily lower the issuance price vs aftermarket trading) through which political uncertainty affects IPO underpricing. We check the robustness of the results using bootstrap tests, adopting alternative proxies for political uncertainty and IPO underpricing and employing subsample analysis.FindingsLocal official turnover-induced political uncertainty increases IPO underpricing by IPO firms voluntarily reducing the issuance price rather than by affecting investor sentiment in aftermarket trading. These relations are stronger in firms with pre-IPO political connections. The effect of political uncertainty on IPO underpricing is also contingent upon the industry and the growth phase of an IPO firm, more pronounced in politically sensitive industries and firms listed on the growth enterprise market board.Originality/valueLocal government officials in China usually have a short tenure and Chinese firms witness significantly severe IPO underpricing. By introducing the SEM model in studying China IPO underpricing, this study identifies the channel through which local government official turnover to political uncertainty on IPO underpricing.

Challenges of water environment governance in China: based on a qualitative comparative analysis approach

ABSTRACT As a developing country focused on water pollution control, understanding the mechanisms behind China's water environment governance challenges is crucial. This study uses fuzzy set qualitative comparative analysis (fs/QCA) to develop a localized political-economic-social-technological (PEST) framework tailored to local governance realities, analyzing cases from the second round of Central Environmental Protection Inspection (CEPI). Two critical paths of local water governance challenges (CWEG) are identified: (1) In the 'government capacity constraints” path, stable yet limited official autonomy, combined with weak social supervision, obscures the institutional environment's empowering role and restricts local governance capacity, hindering environmental management effectiveness. (2) In the 'formalism in governance' path, a strong institutional environment, significant fiscal decentralization, robust digital infrastructure, green technology innovation, and low official turnover create a favorable governance environment. However, under the logic of avoiding accountability, formalism may emerge, posing challenges to effective water resource management.

Local official turnover and bank risk-taking: Evidence from China

This study investigates the impact of turnover among local government officials on the risk-taking of local commercial banks in China. Our findings reveal a positive relationship between official turnover and risk-taking in banks. The observed effect is mainly due to a deterioration in credit allocation and heightened competition among banks. Heterogeneous analysis indicates that the impact is more significant in non-election years, in years of enhanced anti-corruption efforts, in regions with poor credit environments, and among smaller banks or banks without political connections. Additionally, compared to normal and local turnover, the positive impact of local official turnover on banks' risk-taking is more pronounced for abnormal and non-local turnovers. These insights deepen our understanding of the economic consequences of official turnover on commercial banks and offer valuable perspectives for banks' risk management strategies.

Political uncertainty and litigation efficiency: Evidence from China

AbstractIn this article, we investigate the influence of local official turnover on litigation efficiency using manually collected data from listed companies in China from 1995 to 2013. Our findings indicate that official turnover leads to a decrease in litigation efficiency, with a 16.3% increase in the duration of litigation cases. This effect is more pronounced when newly appointed officials are working in different locations. It is more significant when the involved enterprise is a private entity, suggesting that political cycles contribute to the selective enforcement of private enterprises. Further analysis reveals that the adverse impact of official turnover on litigation efficiency is short‐lived. The conclusions contribute to the existing literature on official turnover and litigation efficiency and hold potential implications for judicial independence reforms.

Power transitions and pollution reduction: Decoding the impact of municipal leadership changes on firm-level pollution in China

This research examines the influence of political system changes, particularly official turnover, on pollution reduction in Chinese industrial firms—a response to the environmental challenges posed by China's economic growth. Utilizing micro-panel data from 2000 to 2014 and an official turnover database, this study assesses how these turnovers affect firm-level pollution. The analysis confirms that official turnovers significantly reduce emissions, with the effect more pronounced in non-state-owned enterprises, under officials who are male, hold PhDs, and are older. This impact is also stronger in areas with a larger tertiary sectors and higher economic growth. A detailed comparison reveals that mayoral turnovers have a greater abatement effect than those of municipal secretaries, especially in cases of abnormal turnovers. Crucially, this study demonstrates that mayoral turnovers lead to pollution reduction by promoting corporate exports and innovation. The baseline regression results, confirmed as robust after extensive robustness checks, underscore the significance of these findings. This paper sheds light on the political dynamics of environmental governance in China, advocating bureaucratic reforms to reduce emissions and providing strategic recommendations to improve national environmental sustainability.

Official Turnover and Sustainable Development in China

Official Turnover and Sustainable Development in China

How does environmental legislation guide urban green transition development? Evidence from China

Based on the unique perspective of local environmental regulations promulgated in Chinese prefecture-level cities from 2000 to 2018, this paper examines the impact of urban environmental legislation on green total factor energy efficiency (GTFEE). The results show that implementing environmental legislation significantly improves local GTFEE, with comprehensive protection regulations contributing to local energy efficiency improvements, while the impact of pollution prevention regulations is insignificant. This conclusion remains robust to multiple scenarios. Potential mechanisms through which environmental legislation can guide urban green transition include the industrial upgrading effect represented by “clean industry development” and “polluting industry exit”, as well as the technical innovation effect achieved through “new technology generation” and “old technology upgrading”. Furthermore, environmental legislation with a higher degree of regulatory effectiveness has a greater potential for energy saving. Environmental legislation has a more significant impact on improving GTFEE in cities in non-old industrial bases, with less frequent turnover of officials, and in central and western regions in China. This study evaluates the positive impact of urban environmental legislation on GTFEE, aiming to advancing the rule of law in local environmental pollution governance and thereby promote urban green transition.

Political turnover and firm innovation in China: The moderating role of innovation and entrepreneurship environment

The empirical work in this paper is based on an analysis of the data of China's listed companies, the innovation and entrepreneurship index, and local official turnover data at the city level. It shows that policy uncertainty caused by local political turnover in local governments significantly reduces firm innovation. However, improvement in local innovation and entrepreneurship environment can lessen this negative impact. This moderating effect is especially relevant among non-high-tech or financially constrained firms. The robustness of these findings is checked through a series of alternative analyses such as dealing with endogeneity, optional measures of the dependent variable and subsamples.

Official Turnover, Political Connections and Enterprise Subsidies: Evidence from China

ABSTRACT This paper investigates the role of political connections in Chinese industrial enterprises receiving government fiscal subsidies. Using data on local officials and enterprises in China, we empirically examine how changes in political connections – due to turnover of key local government officials – impact enterprise subsidies. We find that enterprise subsidies decrease significantly in the year when local officials’ turnover. However, subsidies change less significantly when the local party secretary is promoted locally or has greater incentives for promotion. The impact of changing political connections is greater for non-state-owned enterprises and large-scale enterprises. Our research helps understand the dynamics between local governments and markets in China. It also has important implications for regulating how subsidies are distributed.

Political uncertainty and high-quality economic development: Evidence from China.

We manually collated data on the turnover of party secretaries and mayors in 285 Chinese cities from 2003 to 2016 and calculated the quality of city economic development represented by environmental total factor productivity growth. We find that the political uncertainty caused by official turnover could significantly promote the improvement of the quality of economic development, and this positive can explained by the progress of production technology and government intervention. Moreover, the political uncertainty caused by the turnover of more educated officials, those with local hukou, promoted officials, and experienced officials could better promote high-quality economic development.

Official Turnover and Corporate ESG Practices: Evidence from China.

In recent years, environmental, social, and governance (ESG) have been extensive concerned. However, few studies have focused on the impact of situational factors on corporate ESG practice decisions. Based on this, using 9428 observations of Chinese A-share listed companies from 2009 to 2019, this paper attempts to explore the impact of local official turnover on corporate ESG practices, and analyzes the boundary effects of this impact from three aspects: region, industry, and corporate. Our results suggest that (1) official turnover can lead to changes in economic policies and redistribution of political resources, which can stimulate companies' "risk aversion motivation" and "development motivation" and thus promote their ESG practices; (2) this effect is more significant in the high degree of government intervention, the high level of industry competition and private corporates. (3) Further test finds that only when the official turnover abnormally and the regional economic development well, official turnover can significantly contribute to corporate ESG. This paper enriches the relevant research on the decision-making scenarios of corporate ESG practices from the macro-institutional perspective.

The pollution reduction effect of official turnover: evidence from China

Under the political system with Chinese characteristics, the turnover of regional officials becomes a norm. So the uncertainty generated by the turnover of officials can often have an impact on the pollution emissions of regional enterprises. This paper examines the impact of official turnover on corporate pollution emissions using the Chinese industrial enterprise database and pollution emission database from 2004 to 2014 in China, while matching urban panel data of prefecture-level cities. The empirical study finds that official turnover significantly reduces the pollution emission of enterprises in that year, while the effect of official turnover from economically developed to economically backward regions and from economically backward to economically developed regions on enterprises' pollution emissions is significantly different. Also, this paper finds that the turnover of officials has a short-term effect on the reduction of corporate pollution emissions. The pollution abatement effect of official turnover is more pronounced in non-resource cities and non-state enterprises. Further analysis reveals that the pollution reduction effect of official turnover is more pronounced when the age of officials is greater than the promotion age threshold of 54 years. Finally, a series of robustness tests were conducted in this paper, while the Heckman two-step method was used to test for endogeneity, and the conclusions reached remained consistent with the benchmark regression.

Priority to Self-Interest? Economic Development? Or Ecological Coordination? The Turnover of Local Officials and Environmental Governance in China

Under the background of government-oriented environmental governance in China, the environmental effect of local official turnover has become an important issue. How to improve governmental governance is an important issue that profoundly affects local environmental governance. Based on a literature analysis, this paper establishes an environmental-effect identification equation to deeply analyze the environmental effect of local official turnover on private enterprises. Then, this paper empirically analyzes the effect of local personnel turnover on the environmental pollution control of private enterprises and the persistence of this effect. The results show that the turnover of local officials has a positive effect on the pollution control investment of private enterprises, but the effect is not persistent. The interest collusion between local officials and private enterprises tends to be one main reason to explain the environmental effect, and two different types of interest collusions are determined: priority to self-interest and economic development. The reasons why the positive effect cannot last for long may be attributed to a lack of systematic and effective institutions or temporary administrative measures. It is important to make local officials fully realize the “green wealth” value of the ecosystems, to change their economic priorities. Finally, this paper proposes countermeasures for local governments on personnel affairs to promote environmental governance.

Turnover of Local Government Officials and Local Air Quality

AbstractThis paper constructs a fixed effect model to study the impact of turnover of local government officials on local air quality, and the mechanism through which this effect takes place, using data from 282 prefecture‐level cities in China from 2015 to 2019. This research shows that turnover of local government officials led to a decline in local air quality, mainly due to a “responsibility gap period.” It also found that the heterogeneity of officials and the difference in the implementation of political initiatives by cities affected the length of the “responsibility gap period” – the shorter it was, the lower the air pollution was during official turnover. Air pollution in China is still severe and the Chinese central government should therefore further reform the turnover system to improve local air quality during the turnover of key local officials by shortening the “responsibility gap period.”

Political uncertainty and corporate sustainability: how does official turnover affect environmental investment

ABSTRACT In response to the growing interest in corporate environmental sustainability practices, this study examines the impact on corporate environmental investment (EI) of the political uncertainty caused by the turnover in government officials. Based on a large sample of 13,321 Chinese listed firms during the period 2000–2017, the study reveals that political uncertainty causes firms to reduce their environmental investment. In examining the moderating influences of political connection and the institutional environment on such a response, we find that the negative relationship between political uncertainty and environmental investment is strengthened when firms have strong political connection, but is weakened in a more developed institutional environment. The results of the study are robust to a variety of sensitivity tests. We also investigate the importance of industry differences in terms of the role of political uncertainty, but find this to be insignificant across different firm ownership and regional location types. The findings of this study extend the current understanding of how and why the sustainable behavior of enterprises varies depending on the effect of political factors, particularly in the Chinese context, and offer important implications for enterprises in their quest to achieve sustainable development.

Political uncertainty and cost stickiness: evidence from prefecture-city official turnover in China

PurposeThe aim of this study is to investigate the impact of local political uncertainty on the asymmetric cost behavior (i.e. cost stickiness) for listed firms in China.Design/methodology/approachIn this study, the authors manually collect the turnover data of prefecture-city officials as a measure of exogenous fluctuations in political uncertainty and obtain firm-level financial information from the China Stock Market Accounting Research (CSMAR) database. To perform the analysis, the authors augment the traditional cost stickiness model by including the interaction terms of the prefecture-city official turnover, and firm-level and prefecture-city level control variables.FindingsThe authors find that political turnover leads to a higher degree of cost stickiness, implying that firms retain slack resources when political uncertainty is high. Moreover, the effect of political turnover on cost stickiness is more pronounced for firms residing in regions with weaker institutional environments, and firms that are privately owned and with smaller size. The authors further provide evidence that policy uncertainty and the threat of losing political connection are two underlying channels. Overall, this study documents that the local political process is an important channel that influences corporate operational decisions.Originality/valueThis study provides the first piece of evidence on the relation between political uncertainty and cost stickiness at the local government level. Moreover, the authors propose and demonstrate two underlying channels through which political uncertainty affects firms' asymmetric cost behavior.

Local Official Turnover and Bank Risk Taking Evidence from China

Local Official Turnover and Bank Risk Taking Evidence from China

Turnover of local government core officials, political connections and the investment and financing of private‐sector enterprises

AbstractIn this study, we examined the power operation and policymaking mechanisms of local governments in China and analysed the sources of risk in macroeconomic policies. Based on the reality of local governance in China, this article defines political uncertainty as normal or abnormal changes in the Standing Members of the Communist Party of China (CPC) Provincial‐level Committee. We analysed the impact of turnovers of these local core officials upon the investment and financing of local private‐sector enterprises. We found that when changes in provincial inner core officials happened normally, the long‐term impact on the investment and financing of local private‐sector enterprises was not so obvious. However, when senior officials were investigated for corruption, the investment and financing of enterprises dropped significantly. For enterprises with personal political capital only, the impact of local core official turnover upon firm financing was even more pronounced. For private‐sector enterprises with partial state ownership, however, this negative impact was significantly weakened in the long term.

Impact of the COVID-19 Epidemic on the Information Disclosure of Government Charity Organizations：Text Analysis Based on the Information Disclosure of Anti-Epidemic Funds and Materials

In China, the information disclosure of charity organizations is lagging behind. Due to the lack of transparency, the negative news about the source and destination of charity funds has been frequently reported. The root of the trust crisis lies in the lack of effective information disclosure mechanism of charity organizations, which has become a stumbling block to the long-term healthy development of charity organizations. During this outbreak, the information disclosure of charity organizations has become a social focus in the fight against the virus. It can be seen that the public crisis not only causes casualties and serious ecological damage, but also causes the charity organizations involved to bear a lot of reputational costs. The epidemic’s query on the information disclosure of charity organizations could promote China’s implementation of the government accounting system reform and put forward constructive suggestions.The epidemic presents an excellent opportunity to study the information disclosure of non-profit organizations under public pressure. This study provides empirical evidence for promoting the implementation of Accounting System of Non-profit Organizations and even Charity Law in China, and emphasizes the importance of central and local governments on anticorrosion work during the epidemic. The occurrence, spread and suppression of the epidemic is a typical natural experiment, which is periodic and unpredictable. The call of the central government will be the political guarantee for non-profit organizations to seize this opportunity.This paper collects the disclosure information of China Charity Federation and Red Cross Society of China, and then empirically tests the development influence of public crisis on the charity information disclosure and its mechanism of action. It is found that the epidemic can promote information disclosure; the supervision effect of media public opinion pressure and the deterrent effect of anti-epidemic official turnover jointly play the regulatory role of external governance. Further analysis shows that after the “Han Hong Foundation” incident, the impact of epidemic development on the information disclosure of charity organizations is more significant. We conduct at least four robustness tests, and our main empirical findings are stable.This paper enriches the existing literature from the following three aspects: (1) It expands the research on the influencing factors of information disclosure of charity organizations, and deepens the understanding of the law of information disclosure of charity organizations. The existing studies mainly discuss the organizational characteristics of charity organizations and the characteristics of council from the perspective of information suppliers to study the influencing factors of information disclosure of charity organizations. This paper examines the demands of information demanders from the development process of public crisis, expands the cognition of influencing factors of information disclosure of charity organizations, and makes up for the lack of information supply perspective. (2) It expands the research on the supervision effect of media reports and the deterrent effect of official turnover. The existing studies have proved that the pressure of public opinion in media reports plays an important role. The findings of this paper prove that in the special situation of public crisis events, media reports and official turnover can significantly improve the response level of charity organizations to social information needs. (3) It expands the policy research on the restoration of social and economic order after the public crisis. The findings of this study show that the public crisis can promote the information disclosure of charity organizations, and has the policy reference significance of “COVID-19 epidemic prevention and control”.

Political uncertainty and firm entry: Evidence from Chinese manufacturing industries

Firm entry promotes the overall vitality and potential of an economy. We examine how political uncertainty, proxied by local government official turnover, affects firm entry in China. We find that political turnover significantly reduces firm entry, particularly when the newly appointed leader is from a different city and when the turnover is not around the National Party Congress. Moreover, our evidence suggests that the effect of political turnover on firm entry is stronger for non-state-owned entrepreneurs and high-technology industries. Our results are robust to assessing selection on unobservable, instrumental variable estimation, HLM analysis, sub-sample without firms in 15 vice-province–level cities and sub-sample without predictable turnovers. Our findings provide solid evidence that political turnover influences firm entry, and shed light upon how the government official exchange system and tenure system in China could be improved to achieve stable economic growth.