Pub Date : 2022-07-03DOI: 10.1080/20954816.2022.2098595
Taufiq Arifin, R. Kabir, Katherin Marthon, S. Sutaryo
Abstract Political connections are an increasingly important part of firms’ strategies to develop relationships with the government and politicians. This study examines the impact of transactional and relational political connections on firm value. The results show that transactionally connected firms are more likely to exhibit greater firm value than their relationally connected and non-connected counterparts. This study further finds evidence of a long-term value-enhancing effect of the transactional approach to political connections. A variety of robustness tests with alternative model specifications continue to show that transactional political connections lead to higher firm value. The findings indicate that firms with transactional political connections are provided with better networks with the political regime in power compared with those with relational political connections. These transactionally connected firms may enjoy preferential treatment from the government, in the form of lower taxes, and the access to government loans, subsidies, bailouts, and/or procurement contracts.
{"title":"Are transactional political connections more valuable to firms than relational political connections?","authors":"Taufiq Arifin, R. Kabir, Katherin Marthon, S. Sutaryo","doi":"10.1080/20954816.2022.2098595","DOIUrl":"https://doi.org/10.1080/20954816.2022.2098595","url":null,"abstract":"Abstract Political connections are an increasingly important part of firms’ strategies to develop relationships with the government and politicians. This study examines the impact of transactional and relational political connections on firm value. The results show that transactionally connected firms are more likely to exhibit greater firm value than their relationally connected and non-connected counterparts. This study further finds evidence of a long-term value-enhancing effect of the transactional approach to political connections. A variety of robustness tests with alternative model specifications continue to show that transactional political connections lead to higher firm value. The findings indicate that firms with transactional political connections are provided with better networks with the political regime in power compared with those with relational political connections. These transactionally connected firms may enjoy preferential treatment from the government, in the form of lower taxes, and the access to government loans, subsidies, bailouts, and/or procurement contracts.","PeriodicalId":44280,"journal":{"name":"Economic and Political Studies-EPS","volume":"10 1","pages":"266 - 278"},"PeriodicalIF":2.4,"publicationDate":"2022-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49552424","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-03DOI: 10.1080/20954816.2022.2090095
Allen Lin, Steven B. Raymar
Abstract This study examines whether the Three Links (3L) policy affected stock returns before, during and after the 2008 Taiwan leadership election. The evidence shows that companies in the industries benefitting from (being damaged by) the 3L policy earned positive (negative) cumulative abnormal returns. Although the political party connection/affiliation seems to have had an impact as well, it was not persistent. When both factors – the policy effect and the political connection effect – are considered together, we find that the policy effect persisted during the election, while the political connection effect did not. It is obvious that the policy effect is a powerful factor explaining changes of stock returns during the 2008 leadership election in China’s Taiwan.
{"title":"The Three Links policy and stock returns","authors":"Allen Lin, Steven B. Raymar","doi":"10.1080/20954816.2022.2090095","DOIUrl":"https://doi.org/10.1080/20954816.2022.2090095","url":null,"abstract":"Abstract This study examines whether the Three Links (3L) policy affected stock returns before, during and after the 2008 Taiwan leadership election. The evidence shows that companies in the industries benefitting from (being damaged by) the 3L policy earned positive (negative) cumulative abnormal returns. Although the political party connection/affiliation seems to have had an impact as well, it was not persistent. When both factors – the policy effect and the political connection effect – are considered together, we find that the policy effect persisted during the election, while the political connection effect did not. It is obvious that the policy effect is a powerful factor explaining changes of stock returns during the 2008 leadership election in China’s Taiwan.","PeriodicalId":44280,"journal":{"name":"Economic and Political Studies-EPS","volume":"10 1","pages":"327 - 341"},"PeriodicalIF":2.4,"publicationDate":"2022-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46636508","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-06-13DOI: 10.1080/20954816.2022.2052453
Qian Liu, Leonard F. S. Wang
Abstract This article explores possible options of the upstream mixed-ownership reform with imperfect substitute products in a vertically related market composed of one upstream SOE and two downstream profit-maximising retailers. Its focus is not only on incorporating the issue of privatisation into a vertical market structure, but also on extending the traditional upstream–downstream competition model by allowing the active contribution of retailers to enhance values at different costs. It finds that in a vertically related market where retailers’ effort matters, the socially optimal policy towards the upstream SOE is partial privatisation regardless what product differentiation is involved, but the specific degree of privatisation is negatively correlated to the level of effort costs. By contrast, in a vertically related market without retailers’ effort, the government tends to choose full nationalisation of the firm.
{"title":"Upstream SOEs in the mixed-ownership reform","authors":"Qian Liu, Leonard F. S. Wang","doi":"10.1080/20954816.2022.2052453","DOIUrl":"https://doi.org/10.1080/20954816.2022.2052453","url":null,"abstract":"Abstract This article explores possible options of the upstream mixed-ownership reform with imperfect substitute products in a vertically related market composed of one upstream SOE and two downstream profit-maximising retailers. Its focus is not only on incorporating the issue of privatisation into a vertical market structure, but also on extending the traditional upstream–downstream competition model by allowing the active contribution of retailers to enhance values at different costs. It finds that in a vertically related market where retailers’ effort matters, the socially optimal policy towards the upstream SOE is partial privatisation regardless what product differentiation is involved, but the specific degree of privatisation is negatively correlated to the level of effort costs. By contrast, in a vertically related market without retailers’ effort, the government tends to choose full nationalisation of the firm.","PeriodicalId":44280,"journal":{"name":"Economic and Political Studies-EPS","volume":"10 1","pages":"462 - 475"},"PeriodicalIF":2.4,"publicationDate":"2022-06-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41706276","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-06-01DOI: 10.1080/20954816.2022.2067516
Yingdan Fan, Zhuang Liang, X. Yao
Abstract China has announced its goal of reaching carbon neutrality by 2060, which will have a profound impact on its energy and economic systems. During this process, the power sector will play a key role in helping the country on its road towards carbon neutrality. This study develops a multi-regional power dispatch and capacity expansion model to combine long-term capacity expansion with short-term power dispatch. The model is built to optimise the carbon-neutral transition pathway from the perspective of economics, focussing on power system stability and reliability under high penetrations of renewables. Using the case study of North China, the cost-effective methods for power system transitions under the targets of reaching peak emissions by 2030 and achieving carbon neutrality by 2060 are discussed under different scenarios. We find that the future power supply system will rely heavily on renewable energy which will account for more than 89% of power generation. Inner Mongolia will produce more than 84% of power in the North China region. The inter-regional power transmission capacity will be five times higher than its current level. Policy choices will lead to different transition pathways as the early-stage installation decisions will have a lock-in effect on the following carbon emission reduction strategies and determine the importance of technologies adopted in achieving carbon neutrality. Although the transition to a low-carbon economy will result in an increase in cost by 17–19%, it will bring huge climate benefits to the world.
{"title":"Regional power system transitions towards carbon neutrality: The case of North China","authors":"Yingdan Fan, Zhuang Liang, X. Yao","doi":"10.1080/20954816.2022.2067516","DOIUrl":"https://doi.org/10.1080/20954816.2022.2067516","url":null,"abstract":"Abstract China has announced its goal of reaching carbon neutrality by 2060, which will have a profound impact on its energy and economic systems. During this process, the power sector will play a key role in helping the country on its road towards carbon neutrality. This study develops a multi-regional power dispatch and capacity expansion model to combine long-term capacity expansion with short-term power dispatch. The model is built to optimise the carbon-neutral transition pathway from the perspective of economics, focussing on power system stability and reliability under high penetrations of renewables. Using the case study of North China, the cost-effective methods for power system transitions under the targets of reaching peak emissions by 2030 and achieving carbon neutrality by 2060 are discussed under different scenarios. We find that the future power supply system will rely heavily on renewable energy which will account for more than 89% of power generation. Inner Mongolia will produce more than 84% of power in the North China region. The inter-regional power transmission capacity will be five times higher than its current level. Policy choices will lead to different transition pathways as the early-stage installation decisions will have a lock-in effect on the following carbon emission reduction strategies and determine the importance of technologies adopted in achieving carbon neutrality. Although the transition to a low-carbon economy will result in an increase in cost by 17–19%, it will bring huge climate benefits to the world.","PeriodicalId":44280,"journal":{"name":"Economic and Political Studies-EPS","volume":"10 1","pages":"416 - 441"},"PeriodicalIF":2.4,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41956829","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-05-24DOI: 10.1080/20954816.2022.2067102
Xin Tian, J. de Haan, Yanping Zhao
Abstract This paper examines the Granger causal relationship between capital flows and economic growth in China over the period 1998Q1–2019Q2, allowing for real effective exchange rate (REER) effects. As parameter instability tests indicate structural changes, we use bootstrap rolling window causality tests, which suggest that the causal nexus between capital flows and GDP growth is time-varying. We find that the causal links between foreign direct investments (FDIs) and GDP growth are hardly affected by the REER, whereas the REER plays a more important role in affecting the causal connections between portfolio investments and other investments and GDP growth. Our results suggest that cumulative portfolio inflows and cumulative other investment inflows harm GDP growth, whereas cumulative portfolio outflows and cumulative other investment outflows positively affect GDP growth.
{"title":"Capital flows, economic growth and the real effective exchange rate: Evidence from China","authors":"Xin Tian, J. de Haan, Yanping Zhao","doi":"10.1080/20954816.2022.2067102","DOIUrl":"https://doi.org/10.1080/20954816.2022.2067102","url":null,"abstract":"Abstract This paper examines the Granger causal relationship between capital flows and economic growth in China over the period 1998Q1–2019Q2, allowing for real effective exchange rate (REER) effects. As parameter instability tests indicate structural changes, we use bootstrap rolling window causality tests, which suggest that the causal nexus between capital flows and GDP growth is time-varying. We find that the causal links between foreign direct investments (FDIs) and GDP growth are hardly affected by the REER, whereas the REER plays a more important role in affecting the causal connections between portfolio investments and other investments and GDP growth. Our results suggest that cumulative portfolio inflows and cumulative other investment inflows harm GDP growth, whereas cumulative portfolio outflows and cumulative other investment outflows positively affect GDP growth.","PeriodicalId":44280,"journal":{"name":"Economic and Political Studies-EPS","volume":"11 1","pages":"123 - 147"},"PeriodicalIF":2.4,"publicationDate":"2022-05-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46931746","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-05-19DOI: 10.1080/20954816.2022.2069334
Zhengkai Liu, Debao Hu, Zheng He
Abstract This paper examines the effect of political connections between mutual fund managers and politicians on the fund performance. Using the publicly available data of individual political donations, we regard the mutual funds as politically connected when their managers make financial contributions to politicians. First, we show that aggregated stock holding changes of politically connected funds predict subsequent abnormal stock returns around the earnings announcement day, implying that the political connection promotes managers’ stock picking abilities. Further evidence derived from the sample of entry buys and exit sells shows that politically connected funds outperform politically non-connected funds by 82 basis points annually. Second, we provide evidence that earnings forecast accuracy for the firms whose stocks are held by politically connected funds is improved significantly when time is approaching the announcement date, highlighting the importance of political channels through which information flows between firms and the market are facilitated.
{"title":"The relationship between political connections and the mutual fund performance: Evidence from the US","authors":"Zhengkai Liu, Debao Hu, Zheng He","doi":"10.1080/20954816.2022.2069334","DOIUrl":"https://doi.org/10.1080/20954816.2022.2069334","url":null,"abstract":"Abstract This paper examines the effect of political connections between mutual fund managers and politicians on the fund performance. Using the publicly available data of individual political donations, we regard the mutual funds as politically connected when their managers make financial contributions to politicians. First, we show that aggregated stock holding changes of politically connected funds predict subsequent abnormal stock returns around the earnings announcement day, implying that the political connection promotes managers’ stock picking abilities. Further evidence derived from the sample of entry buys and exit sells shows that politically connected funds outperform politically non-connected funds by 82 basis points annually. Second, we provide evidence that earnings forecast accuracy for the firms whose stocks are held by politically connected funds is improved significantly when time is approaching the announcement date, highlighting the importance of political channels through which information flows between firms and the market are facilitated.","PeriodicalId":44280,"journal":{"name":"Economic and Political Studies-EPS","volume":"11 1","pages":"174 - 208"},"PeriodicalIF":2.4,"publicationDate":"2022-05-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46482647","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-15DOI: 10.1080/20954816.2022.2055814
Zhigang Qiu, Xi Sun, Lijun Wu, Dun Jia, Ziyue Wang
Abstract While the local government debts and local government financing vehicle (LGFV) bonds underwent reconstruction, in 2018 the new asset management regulation introduced some tighter measures to restrain shadow banking business and to mitigate the moral hazard issue that led to an ongoing boom of the LGFV market. This paper examines the impacts of the 2018 new asset management regulation on the credit spread of newly issued LGFV bonds and explores how the new asset management regulation affects the implicit guarantee of local governments in the LGFV market that has piled up systemic risks. We find that the release of the new asset management regulation has raised the credit spread of LGFV bonds at issuance. More importantly, the credit spread becomes increasingly sensitive to the local governments’ financial capacity and credibility right after the introduction of the new asset management regulation. Therefore, investors are compensated by more risk premiums for holding LGFV bonds issued by the local governments with a weaker balance sheet. Consequently, the implicit guarantee problem in the LGFV bond market has worsened.
{"title":"The 2018 new asset management regulation and LGFV bonds in China","authors":"Zhigang Qiu, Xi Sun, Lijun Wu, Dun Jia, Ziyue Wang","doi":"10.1080/20954816.2022.2055814","DOIUrl":"https://doi.org/10.1080/20954816.2022.2055814","url":null,"abstract":"Abstract While the local government debts and local government financing vehicle (LGFV) bonds underwent reconstruction, in 2018 the new asset management regulation introduced some tighter measures to restrain shadow banking business and to mitigate the moral hazard issue that led to an ongoing boom of the LGFV market. This paper examines the impacts of the 2018 new asset management regulation on the credit spread of newly issued LGFV bonds and explores how the new asset management regulation affects the implicit guarantee of local governments in the LGFV market that has piled up systemic risks. We find that the release of the new asset management regulation has raised the credit spread of LGFV bonds at issuance. More importantly, the credit spread becomes increasingly sensitive to the local governments’ financial capacity and credibility right after the introduction of the new asset management regulation. Therefore, investors are compensated by more risk premiums for holding LGFV bonds issued by the local governments with a weaker balance sheet. Consequently, the implicit guarantee problem in the LGFV bond market has worsened.","PeriodicalId":44280,"journal":{"name":"Economic and Political Studies-EPS","volume":" ","pages":""},"PeriodicalIF":2.4,"publicationDate":"2022-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49349801","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-07DOI: 10.1080/20954816.2022.2052452
Di Gao, Yongsheng Chu, Hongjin Xiang
{"title":"Mixed oligopoly, state-owned banks’ shareholding reform and foreign capital penetration","authors":"Di Gao, Yongsheng Chu, Hongjin Xiang","doi":"10.1080/20954816.2022.2052452","DOIUrl":"https://doi.org/10.1080/20954816.2022.2052452","url":null,"abstract":"","PeriodicalId":44280,"journal":{"name":"Economic and Political Studies-EPS","volume":" ","pages":""},"PeriodicalIF":2.4,"publicationDate":"2022-04-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42589836","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-07DOI: 10.1080/20954816.2021.1976900
R. Giloth
Abstract Intermediaries are specialised organisations that perform bridging and integrative functions to achieve improved results of social policies. Intermediaries have been most effective in the United States (US) when aligned with education and workforce system improvements and redesign, not as parallel and separate efforts. Intermediaries operate in many US social policy domains, including workforce and education, where they contribute to overcoming fragmented institutions and solving mismatch problems that interfere with hiring, career pathways and educational achievements. Intermediary solutions are especially important for creating better outcomes for low-income students and workers and improving overall racial and ethnic equity. Five mismatches especially prevalent in the US labour market require intermediary solutions: organising business to improve human resources, creating improved pathways from school to work, integrating and focussing multiple education investments, linking workforce and economic development, and improving access and use of data for design, performance management and advocacy. This paper discusses these mismatches and related intermediary solutions in more depth, offers examples of specific intermediaries in action and identifies intermediary challenges and opportunities faced by intermediaries to function better. The paper also points out that, more broadly, intermediaries are only a part of the solution to labour market and education inequalities and that broader changes in the political economy and policies are required to effect wage growth and labour market participation.
{"title":"The role of intermediaries in US workforce and education innovation","authors":"R. Giloth","doi":"10.1080/20954816.2021.1976900","DOIUrl":"https://doi.org/10.1080/20954816.2021.1976900","url":null,"abstract":"Abstract Intermediaries are specialised organisations that perform bridging and integrative functions to achieve improved results of social policies. Intermediaries have been most effective in the United States (US) when aligned with education and workforce system improvements and redesign, not as parallel and separate efforts. Intermediaries operate in many US social policy domains, including workforce and education, where they contribute to overcoming fragmented institutions and solving mismatch problems that interfere with hiring, career pathways and educational achievements. Intermediary solutions are especially important for creating better outcomes for low-income students and workers and improving overall racial and ethnic equity. Five mismatches especially prevalent in the US labour market require intermediary solutions: organising business to improve human resources, creating improved pathways from school to work, integrating and focussing multiple education investments, linking workforce and economic development, and improving access and use of data for design, performance management and advocacy. This paper discusses these mismatches and related intermediary solutions in more depth, offers examples of specific intermediaries in action and identifies intermediary challenges and opportunities faced by intermediaries to function better. The paper also points out that, more broadly, intermediaries are only a part of the solution to labour market and education inequalities and that broader changes in the political economy and policies are required to effect wage growth and labour market participation.","PeriodicalId":44280,"journal":{"name":"Economic and Political Studies-EPS","volume":"11 1","pages":"252 - 273"},"PeriodicalIF":2.4,"publicationDate":"2022-04-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47573806","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-06DOI: 10.1080/20954816.2022.2052454
Mingyuan Sun, Leonard F. S. Wang, Qidi Zhang
{"title":"Specific vs. ad valorem taxation and social welfare in mixed duopoly with foreign ownership","authors":"Mingyuan Sun, Leonard F. S. Wang, Qidi Zhang","doi":"10.1080/20954816.2022.2052454","DOIUrl":"https://doi.org/10.1080/20954816.2022.2052454","url":null,"abstract":"","PeriodicalId":44280,"journal":{"name":"Economic and Political Studies-EPS","volume":" ","pages":""},"PeriodicalIF":2.4,"publicationDate":"2022-04-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46196375","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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