Anticorruption Campaign and the Value of Political Connection
Political environment has significant effects on the competitive environment of firms. In response to this, many firms adopt active corporate political activity to shape government policy in ways favorable to themselves. There are important political events in 2016. First, the United Kingdom European Union membership referendum result was announced on June 24, 2016, and United Kingdom will withdraw from the European Union. This is widely known as Brexit. Second, Donald Trump was elected in November 2016 to be the next United States president, while before the election, Hilary Clinton was in a favorite position. Both Brexit and the United States presidential election surprised the global markets and had significant impacts on the world politics and economy. We also see firms change their operation to respond: Global financial firms may move their European headquarters from London to other European countries, and many business leaders visited the Trump Tower to talk to the United States president-elect. It is documented that on average the stock price increased on the day when their CEOs visited the Trump Tower (See the news report by CNBC on January 11, 2017. The news can be accessed here: http://www.cnbc.com/2017/01/11/stock-market-trump-tower-visits-prove-profitable-for-corporate-ceos.html).
We are grateful to the Research Grants Council of Natural Science Foundation of China (71302127 and 71772196), Young Elite Teacher Project of Central University of Finance and Economics (QYP1606), the Fundamental Research Funds for the Central Universities, Program for Innovation Research in Central University of Finance and Economics, The Special Research Fund for the Doctoral Program of Ministry of Education (20130016120001) and The Ministry of education of Humanities and Social Science project (17YJC630062).
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