NBER

Xiaofeng Zhao

8 Castle Peak Road, Tuen Mun, HK

E-Mail: x4zhao@ln.edu.hk
Institutional Affiliation: Lingnan University

NBER Working Papers and Publications

February 2016What do we learn from stock price reactions to China’s first announcement of anti-corruption reforms?
with Chen Lin, Randall Morck, Bernard Yeung: w22001
China’s markets gained 3.86% around December 4, 2012, when the Party announced anti-corruption reforms. State-owned enterprises (SOEs) with higher past entertainment and travel costs (ETC) gained more. NonSOEs gained in more liberalized provinces, especially those with high past ETC, productivity, growth opportunities, and external financing. NonSOEs lost in the least liberalized provinces, especially those with high past ETC. These findings support investors’ expect reduced official corruption to create value overall, reduce SOE waste, lower bureaucratic barriers to efficient resource allocation where markets function, and impede business in unliberalized provinces, where “getting things done” still requires investment in greasing bureaucratic gears.

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