The Value of Local Political Capital in Transition China

Posted: 3 Mar 2017

See all articles by Pei Sun

Pei Sun

University of Manchester - Alliance Manchester Business School

Haoping Xu

Independent

Jian Zhou

University of Hawaii at Manoa

Date Written: 2011

Abstract

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

Sun, Pei and Xu, Haoping and Zhou, Jian, The Value of Local Political Capital in Transition China (2011). 2011. Economics Letters, Vol. 110, No. 3, 189-192, Available at SSRN: https://ssrn.com/abstract=2926092

Pei Sun (Contact Author)

University of Manchester - Alliance Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Haoping Xu

Independent ( email )

Jian Zhou

University of Hawaii at Manoa ( email )

Honolulu, HI 96822
United States

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