Politically motivated corporate decisions as tournament participation/inclusion games
- Title
- Politically motivated corporate decisions as tournament participation/inclusion games
- Author
- 강창모
- Keywords
- Agency; China; Corporate investments; Participation/inclusion games; Politically motivated corporate decisions; Taxes
- Issue Date
- 2021-04
- Publisher
- Elsevier B.V.
- Citation
- Journal of Corporate Finance, v. 67, article no. 101883
- Abstract
- We introduce political tournament “participation/inclusion” games. Dominant strategies determine whether players choose to compete by enhancing economic performance. Unique Nash equilibria competitors win (only) inclusion as promotion candidates. We find empirical justification for such equilibria in Chinese province heads' periodic political tournaments/elections for promotion to the Communist Party politburo and government positions. We document pervasive tournament-synchronized corporate decision-making cyclicality. Firms enhance economic performance by increasing investments, taxes, and employment before elections. Cyclicality is dominantly driven by privately-owned enterprises, is weaker in economically/politically weak(strong) provinces. Political promotions, however, are not sensitive to corporate investments enhanced before tournaments but to long-run investments. © 2021 Elsevier B.V.
- URI
- https://www.sciencedirect.com/science/article/pii/S0929119921000031?via%3Dihubhttps://repository.hanyang.ac.kr/handle/20.500.11754/176589
- ISSN
- 0929-1199
- DOI
- 10.1016/j.jcorpfin.2021.101883
- Appears in Collections:
- COLLEGE OF BUSINESS[S](경영대학) > FINANCIAL MANAGEMENT(파이낸스경영학과) > Articles
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