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Local officials Turnover and Corporate Risk——Evidence from Chinese Listed Firms
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TitleLocal officials Turnover and Corporate Risk——Evidence from Chinese Listed Firms  
AuthorLuo Danglun, Liao Junping and Wang Jue  
OrganizationLingnan College, Sun Yat-sen University; School of Economics, Zhejiang University;; 
Key WordsOfficial turnovers; Political uncertainty; Corporate risk 
AbstractThe political uncertainty aroused by official turnovers often has a major impact on local economic development, thus affects the daily operating and investing activities of local firms. This paper investigates whether the political uncertainty increases the market risk faced by local firms and which factors can aggravate or mitigate this mechanism. Using data of listed firms in China from 1999-2012 as sample, we find the political uncertainty significantly increases the current year’s market risk faced by local firms. Besides, the degree of political uncertainly can be significantly reduced if the new official has some connection with the provincial or local leaders, thus lower the impact on local firms. Also, the impact of political uncertainty is more pronounced when the firms are private owned, in regulated industries or in the regions with lower degree of marketalization. This paper enriches the research on corporate risk, and can help us to better understand the transmission mechanism of political uncertainty and the economic consequences it causes as well. 
Serial NumberWP773 
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