The price of official-business collusion: Evidence from the stock market reaction to “Hunting the Tigers” in China

Abstract

Purpose

The purpose of this paper is to investigate whether the anti-corruption campaign, “Hunting the Tigers,” incurs a significant short-term loss of shareholders’ returns.

Design/methodology/approach

A sophisticated event study approach is employed.

Findings

The results show that the “Hunting the Tigers” has incurred a significant short-term loss of investment returns for shareholders in China’s main stock market board. In addition, the beginning of a new assault on China’s official mogul corruption in another round of political anti-corruption cycle after the 18th National Congress of the CPC has reduced this price significantly.

Originality/value

This finding should be perceived as the price of the corruption of official-business collusion within capital markets in contemporary China.

Citation

Hou, X. and Li, S. (2020), "The price of official-business collusion: Evidence from the stock market reaction to “Hunting the Tigers” in China", China Finance Review International, Vol. 10 No. 1, pp. 52-74. https://doi.org/10.1108/CFRI-07-2018-0114