Accounting Seminar（2018-27）

Topic: Silence Is Golden: Political Connection and Corporate Disclosure of Government Subsidies

Speaker: Ningzhong Li, University of Texas at Dallas

Time: Thursday, Dec 27th, 10:00-11:30 a.m

Place: Room 217, Guanghua Building 2

Abstract:

This paper examines the association between firms’ political connection and their voluntary disclosure on government subsidies using a sample of Chinese non-state-owned enterprises. For the sample period 2007~2016, we find that politically connected subsidy-receiving firms provide a lower amount of subsidy disclosures through annual reports than unconnected ones. This association is mainly driven by connected firms whose subsidies are difficult to justify, is stronger for firms registered in provinces with a higher level of corruption and firm with higher media attention, and becomes weaker following the anti-corruption campaign starting in late 2012. These findings suggest that politically connected subsidy recipients tend to withhold subsidy information to reduce the costs for the politicians they connect to and themselves from the public scrutiny of subsidies granted through relationships. Consistent with this interpretation, we further show that politically connected firms are granted more subsidies and this association is stronger in provinces with a higher level of corruption and becomes weaker following the anti-corruption campaign.

Introduction:

Dr. Ningzhong Li is an Associate Professor of Accountancy Department in University of Taxes at Dallas. He holds a B.A. and M.A in Peking University. And he holds a Ph.D. in University of Chicago.

//jindal.utdallas.edu/som/faculty/ningzhong-li

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