Title

Political connections of Chinese fund management companies and fund performance

Document Type

Article

Publication Date

8-1-2023

Abstract

This study uses hand-collected information on shareholders’ backgrounds of mutual funds and their fund management companies (FMCs), and administrative and criminal penalties for insider trading as the proxy of government regulation intensity. We fill a gap in the literature by identifying a positive relationship between funds’ performance and the proportion of state-owned FMC ownership that becomes negative when the Chinese government increased its regulatory effort to reduce informational advantages from political connections obtained through this ownership channel. Results are robust using DiD and IV analyses, placebo tests, propensity score matching, Oster test for missing covariates, channel tests, and alternate ownership classifications.

Publication Title

Financial Review

First Page Number

597

Last Page Number

627

DOI

10.1111/fire.12334

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