The Value of Local Political Capital in Transition China
Posted: 3 Mar 2017
Date Written: 2011
This paper documents stock market responses to the arrest of Shanghai's top leader by the Chinese central government in September 2006. The effects of personal-level and organizational-level connections to the local state are found to be negative and insignificant, respectively, on cumulative abnormal returns (CARs). Furthermore, companies having both personal and organizational political ties experienced the most adverse market reaction.
Keywords: Political Capital, Personal-Level Connections, Organizational-Level Connections, Stock Market Reponse
JEL Classification: B26, P16
Suggested Citation: Suggested Citation