This article presents a large-scale, systematic study of politically connected firms in China. It... more This article presents a large-scale, systematic study of politically connected firms in China. It was conducted by compiling a database of all the publicly traded firms in China in 1993, 2002 and 2012 that codes the biographies of hundreds of thousands of board members. I find that there has been a significant increase in the percentage of firms that are connected with the national government in the last 20 years. This casts doubt on a popular argument that businesses in China have primarily relied on “local protectionism.” I interpret this as a result of firms’ need to connect with powerful and stable institutions. I test this by examining the impact of the fall of Chen Liangyu on firms in Shanghai.
Over the past two decades, the Chinese domestic security apparatus has expanded dramatically. “St... more Over the past two decades, the Chinese domestic security apparatus has expanded dramatically. “Stability maintenance” operations have become a top priority for local Chinese authorities. We argue that this trend goes back to the early 1990s, when central Party authorities adopted new governance models that differed dramatically from those of the 1980s. They increased the bureaucratic rank of public security chiefs within the Party apparatus, expanded the reach of the Party political-legal apparatus into a broader range of governance issues, and altered cadre evaluation standards to increase the sensitivity of local authorities to social unrest. We show that the origin of these changes lies in a policy response to the developments of 1989–1991, namely the Tiananmen democracy movement and the collapse of communist political systems in Eastern Europe. Over the past twenty years, these practices have developed into an extensive stability maintenance apparatus, whereby local governance is increasingly oriented around the need to respond to social unrest, whether through concession or repression. Chinese authorities now appear to be rethinking these developments, but the direction of reform remains unclear.
I conduct an event study of an exogenous pollution shock-smog in the winter of 2013 to examine ho... more I conduct an event study of an exogenous pollution shock-smog in the winter of 2013 to examine how the market values of firms in polluting industries and environmental protecting industries, respectively, responded in "the world's worst polluter" : China. I first show that politically connected polluters, defined by having at least one board member who was a former local bureaucrat, are more likely to be state owned and in debt. During the 21 days of the smog, polluters experienced a cumulative abnormal return of –5.38%, while protectors had a cumulative abnormal return of 3.50%. However, politically connected polluters were less susceptible to the shock: they experienced a 1% greater positive abnormal return than unconnected polluters. Connected protectors also benefited from a greater 1% abnormal return than unconnected protectors. The findings imply that environmental disasters have distributional effects, and support a theory that links rent-seeking behavior to pollution.
Why has the Chinese communist state remained so durable in an age of democratization? Contrary to... more Why has the Chinese communist state remained so durable in an age of democratization? Contrary to existing theories, this article argues that the strong state coercive capacity has survived the authoritarian rule in China. We demonstrate that the Chinese Communist Party has taken deliberate actions to enhance the cohesion of its coercive organ-izationsdthe police, in particulardby distributing " spoils of public office " to police chiefs. In addition, the state has extended the scope of its coercion by increasing police funding in localities where the state sector loses control of the population. We use and rely on mixed methods to test this theory.
How does the Chinese Communist Party (CCP) secure the loyalty of its coercive leaders, and its pu... more How does the Chinese Communist Party (CCP) secure the loyalty of its coercive leaders, and its public security chiefs in particular, in the face of numerous domestic protests every year? This article presents the first quantitative analysis of contemporary China’s coercive leaders using an original data set of provincial public security chiefs and public security funding during the reform era. I demonstrate that the CCP, owing to its concern for regime stability, has empowered the public security chiefs by incorporating them into the leadership team. Empowered public security chiefs then have stronger bargaining power over budgetary issues. I rely on fieldwork, qualitative interviews and an analysis of Party documents to complement my statistical analysis. The findings of this analysis shed light on the understanding of regime durability, contentious politics and the bureaucracy in China.
Scholars have suggested that corruption could serve as a substitute for property-protecting insti... more Scholars have suggested that corruption could serve as a substitute for property-protecting institutions in developing countries, but very few empirical studies have been conducted to test this theory. Most existing studies on the determinants of corruption are cross-national, rely on perception-based measures, and focus on economic development, regime type, and market structure as explanatory variables. Little is known about why corruption occurs in an authoritarian state at the micro level. We theorize bribery as a bargaining process between a firm and a rent-maximizing public official, and we assume that graft-paying firms face different sets of rules and regulations, which govern firms' costs and benefits of bribing. We test the hypothesis that firms' bribes are determined by the rigor of their internal auditing control and the quality of property-protecting institutions. We use entertainment and travel costs directly observed in a large-scale firm-level survey in China as a proxy for corruption. Our study implies that firms operating in a weak property rights regime rely on political connections as a substitute for formal legal protection. The findings shed light on the literature on property rights, corruption, and East Asian development.
A collection of articles on contemporary crime and criminal justice in the former Soviet Union.
... more A collection of articles on contemporary crime and criminal justice in the former Soviet Union.
All articles in the special issue are now available for free download, effective immediately through July 8, on the following link: http://tcr.sagepub.com/content/19/2.toc.
This article presents a large-scale, systematic study of politically connected firms in China. It... more This article presents a large-scale, systematic study of politically connected firms in China. It was conducted by compiling a database of all the publicly traded firms in China in 1993, 2002 and 2012 that codes the biographies of hundreds of thousands of board members. I find that there has been a significant increase in the percentage of firms that are connected with the national government in the last 20 years. This casts doubt on a popular argument that businesses in China have primarily relied on “local protectionism.” I interpret this as a result of firms’ need to connect with powerful and stable institutions. I test this by examining the impact of the fall of Chen Liangyu on firms in Shanghai.
Over the past two decades, the Chinese domestic security apparatus has expanded dramatically. “St... more Over the past two decades, the Chinese domestic security apparatus has expanded dramatically. “Stability maintenance” operations have become a top priority for local Chinese authorities. We argue that this trend goes back to the early 1990s, when central Party authorities adopted new governance models that differed dramatically from those of the 1980s. They increased the bureaucratic rank of public security chiefs within the Party apparatus, expanded the reach of the Party political-legal apparatus into a broader range of governance issues, and altered cadre evaluation standards to increase the sensitivity of local authorities to social unrest. We show that the origin of these changes lies in a policy response to the developments of 1989–1991, namely the Tiananmen democracy movement and the collapse of communist political systems in Eastern Europe. Over the past twenty years, these practices have developed into an extensive stability maintenance apparatus, whereby local governance is increasingly oriented around the need to respond to social unrest, whether through concession or repression. Chinese authorities now appear to be rethinking these developments, but the direction of reform remains unclear.
I conduct an event study of an exogenous pollution shock-smog in the winter of 2013 to examine ho... more I conduct an event study of an exogenous pollution shock-smog in the winter of 2013 to examine how the market values of firms in polluting industries and environmental protecting industries, respectively, responded in "the world's worst polluter" : China. I first show that politically connected polluters, defined by having at least one board member who was a former local bureaucrat, are more likely to be state owned and in debt. During the 21 days of the smog, polluters experienced a cumulative abnormal return of –5.38%, while protectors had a cumulative abnormal return of 3.50%. However, politically connected polluters were less susceptible to the shock: they experienced a 1% greater positive abnormal return than unconnected polluters. Connected protectors also benefited from a greater 1% abnormal return than unconnected protectors. The findings imply that environmental disasters have distributional effects, and support a theory that links rent-seeking behavior to pollution.
Why has the Chinese communist state remained so durable in an age of democratization? Contrary to... more Why has the Chinese communist state remained so durable in an age of democratization? Contrary to existing theories, this article argues that the strong state coercive capacity has survived the authoritarian rule in China. We demonstrate that the Chinese Communist Party has taken deliberate actions to enhance the cohesion of its coercive organ-izationsdthe police, in particulardby distributing " spoils of public office " to police chiefs. In addition, the state has extended the scope of its coercion by increasing police funding in localities where the state sector loses control of the population. We use and rely on mixed methods to test this theory.
How does the Chinese Communist Party (CCP) secure the loyalty of its coercive leaders, and its pu... more How does the Chinese Communist Party (CCP) secure the loyalty of its coercive leaders, and its public security chiefs in particular, in the face of numerous domestic protests every year? This article presents the first quantitative analysis of contemporary China’s coercive leaders using an original data set of provincial public security chiefs and public security funding during the reform era. I demonstrate that the CCP, owing to its concern for regime stability, has empowered the public security chiefs by incorporating them into the leadership team. Empowered public security chiefs then have stronger bargaining power over budgetary issues. I rely on fieldwork, qualitative interviews and an analysis of Party documents to complement my statistical analysis. The findings of this analysis shed light on the understanding of regime durability, contentious politics and the bureaucracy in China.
Scholars have suggested that corruption could serve as a substitute for property-protecting insti... more Scholars have suggested that corruption could serve as a substitute for property-protecting institutions in developing countries, but very few empirical studies have been conducted to test this theory. Most existing studies on the determinants of corruption are cross-national, rely on perception-based measures, and focus on economic development, regime type, and market structure as explanatory variables. Little is known about why corruption occurs in an authoritarian state at the micro level. We theorize bribery as a bargaining process between a firm and a rent-maximizing public official, and we assume that graft-paying firms face different sets of rules and regulations, which govern firms' costs and benefits of bribing. We test the hypothesis that firms' bribes are determined by the rigor of their internal auditing control and the quality of property-protecting institutions. We use entertainment and travel costs directly observed in a large-scale firm-level survey in China as a proxy for corruption. Our study implies that firms operating in a weak property rights regime rely on political connections as a substitute for formal legal protection. The findings shed light on the literature on property rights, corruption, and East Asian development.
A collection of articles on contemporary crime and criminal justice in the former Soviet Union.
... more A collection of articles on contemporary crime and criminal justice in the former Soviet Union.
All articles in the special issue are now available for free download, effective immediately through July 8, on the following link: http://tcr.sagepub.com/content/19/2.toc.
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All articles in the special issue are now available for free download, effective immediately through July 8, on the following link: http://tcr.sagepub.com/content/19/2.toc.
All articles in the special issue are now available for free download, effective immediately through July 8, on the following link: http://tcr.sagepub.com/content/19/2.toc.