Understanding the effects of social status competition, firm-government quid pro quo and the anti-corruption campaign in China

Ma, Huanjia (2022). Understanding the effects of social status competition, firm-government quid pro quo and the anti-corruption campaign in China. University of Birmingham. Ph.D.

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Abstract

We first examine the relationship between China's sex ratio, defined as the male to female ratio, and educational decisions. Using provincial-level data from 1999 to 2015, we find that the sex ratio is negatively associated with the high school enrolment rate. Next, using the 2012, 2014 and 2016 waves of the China Family Panel Survey, we find that the level of community social status competition is negatively associated with the education expenditure of households with sons. This evidence supports the theory that a high sex ratio raises social status competition (because social status is positively related to the likelihood of finding a wife), which in turn has a negative impact on educational outcomes.
Next, by exploiting the unique political institutions in China, we examine the exchanges of favours between government officials and firms. Using a panel of Chinese listed firms over the period 2003–2017, We find that listed private and foreign firms show significantly higher investments following the appointments of new city leaders who are connected to the provincial party sectary. We argue that the most likely explanation is that connected city leaders engage in favour exchanges with firms to promote economic growth. By matching administrative land transaction data with listed firms from 2005 to 2017, we then find that listed private and foreign firms receive preferential treatment from their local government when buying land parcels in return.
Finally, we examine firms' investment in building political connections during the anti-corruption campaign initiated by President Xi Jinping. Using a panel of Chinese listed firms from 2012 to 2015, we find that after a connected official is arrested as a result of the anti-corruption campaign, firms significantly increase their perk spending (which includes business entertainment costs and travel costs) by 15 to 16%. We also find that after the arrest of a connected official, if the arrested official was connected to the CEO, firms are more likely to replace their CEO .

Type of Work:

Thesis (Doctorates > Ph.D.)

Award Type:

Doctorates > Ph.D.

Supervisor(s):