The Role of Corporate Donations in Chinese Political Markets
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Many corporations actively engage in political activities to enhance their relationships with politicians, facilitating access to scarce resources and creating competitive advantages. We investigate corporate donations to explore how they initiate interactions between firms and new local leaders in China. Specifically, we propose that political turnover creates unique opportunities for firms to win over new officials via corporate donations, especially in competitive markets. Moreover, we find that firms that make generous donations at the beginning of a new city secretary’s tenure receive more attention from representatives of new local leaders, especially firms that were politically disadvantaged under a predecessor’s governance. Empirical studies on the turnover of city secretaries between 2001 and 2012 in China strongly support our hypotheses. Consequently, this study improves our understanding of how corporate donations initiate social exchanges between firms and politicians.
KeywordsPolitical turnover Corporate donation Official visits Initial interaction Corporate political activity Social exchange Chinese political market
This study was funded by grants from National Natural Science Foundation of China (No. 71672139; No. 71372065; No. 71272002), Shaanxi Province Overseas Students (Grant No. 18920004), and Humanities and Social Science Talent Plan of Shaanxi University. The authors also express their appreciation to the editors and three anonymous reviewers for their suggestions and comments. However, the authors are responsible for all errors in the paper.
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