Siirry sisältöön
  • Add to calendar
    Bank of Finland, Rauhankatu 19 B, Helsinki 

Bünyamin Önal (Aalto University School of Business): Political (dis)connections and corporate investment decisions: Evidence from China

co-author: Nan Xiong (University of Surrey)

Abstract
Exploiting a unique ruling in China that resulted in eviction of politicians and bureaucrats from corporate boards, we offer causal evidence on how political (dis)connections affect corporate investment behavior. We show that capital expenditures and acquisitions become more sensitive to political uncertainty for disconnected firms. Managers also pay more attention to stock market signals after the departure of politically connected board members, particularly when signals contain more information about policy. Our findings hold up to a battery of robustness checks as well as alternative explanations. Thus, we conclude that political connections facilitate investment decisions. 

 

 

BOFIT seminars are open to all researchers interested in the subjects covered. Those wishing to attend a seminar are kindly asked to register in advance, by email bofit(at)bof.fi or tel. +358 9 183 2268.

Seminars take place, as a rule, on Tuesdays, starting at 10.30 a.m. Visitors are escorted to the seminar room from the Rauhankatu 19 B (Library) entrance.