The Effect of the Xi Jinping Administration’s Anticorruption Campaign on the Performance of State-Owned Enterprises

Abstract

There has been a debate on how the state-driven anticorruption movement during the Xi Jinping administration has influenced state-owned enterprises (SOEs). Research has examined the relationship between corruption and economic development at the country level in Asia and has found paradoxically that economic growth and high corruption levels can coexist. However, the “Asian paradox” that appears at the country level may be a transitional phenomenon of the short term. Not many researchers have empirically compared individual firm-level performance before and after a strong anticorruption drive, drawing on relevant comparison groups. This study tests whether Xi’s 2012 anticorruption campaign improved SOEs’ performance. With a difference-in-differences method, it explores whether the anticorruption campaign had different effects on the financial performance of SOEs and non-SOEs (private companies). We find that the anticorruption initiative improved SOEs’ financial performance and benefited SOEs more than non-SOEs.

Political Uncertainty and Corporate Investment: Evidence from the Chinese Private Companies

“…The impact of political uncertainty on business activity depends on how the Communist Party exerts influence over privatized SOEs and originally privately owned enterprises. Recent studies show strong anti-corruption policies against SOEs and privatized SOEs can improve corporate performance (Piao and Jung, 2021; Zhang et al, 2017). However, further research remains on whether such massive government intervention will lead to sustainable corporate profits.…”