Can government intervention be both a curse and a blessing? Evidence from China's finance sector

Feng, Lingbing; Fu, Tong; Kutan, Ali M.

doi:10.1016/j.irfa.2018.10.010

Cited by 24 publications

(11 citation statements)

References 37 publications

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“…In contrast, the negative effect of managerial ability on the likelihood of goodwill impairment is evident for non-SOEs without earnings smoothing motivation. Overall, our findings are supported by related literature (see AbuGhazaleh et al, 2011;Demerjian et al, 2020;Feng et al, 2019;Glaum et al, 2018;Lee et al, 2018).…”

Section: Discussionsupporting

confidence: 92%

“…Hopkin and Rodríguez-Pose (2007) argue that government agents may abuse their power to expropriate corporate resources and seek rents, leading to more severe moral hazard and adverse selection in SOEs. For example, Feng et al (2019) find that government intervention promotes firms' financial access to capital by making informal payments. Nevertheless, the above analysis suggests that the relationship between managerial ability and goodwill impairment may differ in SOEs and non-SOEs due to potential government intervention in SOEs.…”

Section: The Moderation Effect Of State Ownershipmentioning

confidence: 99%

“…Third, we examine whether the mediation effect of financial performance is affected by state ownership as researchers argue that government intervention could be both a curse and a blessing for state-owned enterprises (SOEs) (Feng, Fu, & Kutan, 2019;Shleifer & Vishny, 1994). This means that the impact of state ownership on the relationship between managerial ability and goodwill impairment is not easy to judge.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Managerial Ability, Financial Performance and Goodwill Impairment: A Moderated Mediation Analysis

2020

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This paper examines whether and how managerial ability affects the likelihood of goodwill impairment of Chinese publicly listed companies over the period 2007-2017. We document a negative relationship between goodwill impairment and managerial ability, and uncover the mediation effect of corporate financial performance.Moreover, we find that the mediation effect is moderated by firms' earnings smoothing motivation and state ownership. The results suggest that when a company has the motivation to smooth earnings or is owned by the government, higher managerial ability of the company does not necessarily reduce the likelihood of goodwill impairment. The findings have important implications for investors and regulators.

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Section: Discussionsupporting

confidence: 92%

Section: The Moderation Effect Of State Ownershipmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Managerial Ability, Financial Performance and Goodwill Impairment: A Moderated Mediation Analysis

2020

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“…Political connections may influence the environment in two ways, namely resource misallocation and environmental regulation. As China has not yet formed a market-based resource allocation system, local governments control key resources (Feng et al, 2019). These resources could be allocated according to firms' political proximity rather than their productive efficiency (Khwaja & Mian, 2005;Goldman et al, 2010).…”

Section: Theoretical Mechanism Of Political Connections Influencing the Environmentmentioning

confidence: 99%

Political Connections and Firm Pollution Behaviour: An Empirical Study

Deng

2020

Environ Resource Econ

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A firm's top manager and a government official may be connected due to special circumstances. This social relationship or political connection may provide industrial polluters with protection or a "pollution shelter" which could lead to severe environmental deterioration. This paper aims to examine the link between political connections and firms' pollution discharges by using Chinese data. Empirical results show that political connections are the institutional origin for firms to adopt strategic pollution discharges. Government officials who are young, of low education, promoted locally and in office for a relatively long time are more likely to build political connections with polluters. This phenomenon may lead to inadequate enforcement of regulation and emission control. The pollution discharge of politically connected firms also varies considerably due to firm heterogeneity. This study also shows that pollution shelter effects caused by political connections are more obvious in the central and western regions, prefecture cities and capital-intensive industries.

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“…Due to vertical administrative centralization and GDP growth-oriented promotion assessment in China, local government officials have huge and flexible discretion in implementing macroeconomic policies and intervening in micro-economic activities (Feng, Fu, & Kutan, 2019;Wang & Hui, 2017;Yu, Yang, & Li, 2019). As officials have different capabilities and preferences, OT brings huge uncertainties in policy implementation, personnel mobility, and assignment of responsibilities (Yee, Tang,…”

Section: The Relationship Between Ot and Air Pollutionmentioning

confidence: 99%

The effects of three types of China's official turnover on air quality: A regression discontinuity study

Chen

Gao

2020

Growth and Change

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Air pollution control has been incorporated into the performance appraisal system of local officials in China. It is necessary to explore the underlying reasons behind China's air pollution. In this study, we measure the effects of different types of official turnover (OT) on air quality using a sharp regression discontinuity model, and collect the appointment information of mayors and municipal party secretaries from 333 cities in China between December 2013 and January 2018. Results show: (a) OT leads to a significant increase in air pollution discharges and this result remains valid after a series of robustness checks; (b) the level of air pollution increases when newly appointed officials are from the local district; (c) officials promoted from other districts tend to break the existing political connections and do not aggravate local air pollution; (d) when officials come from the central government, they often do not take any actions to control air pollution; (e) from the perspective of heterogeneity, we find that frequency of turnover, ex‐officials, and the age, place of birth, and region of the officials have a heterogeneous impact on the officials' behavior. These findings shed new light on the determinants of air quality and suggest that OT is important in controlling air pollution.

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Can government intervention be both a curse and a blessing? Evidence from China's finance sector

Cited by 24 publications

References 37 publications

Managerial Ability, Financial Performance and Goodwill Impairment: A Moderated Mediation Analysis

Managerial Ability, Financial Performance and Goodwill Impairment: A Moderated Mediation Analysis

Political Connections and Firm Pollution Behaviour: An Empirical Study

The effects of three types of China's official turnover on air quality: A regression discontinuity study

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