Title: Nexus Effect: Unraveling the Impact of Political Patronage Connections on Corporate Investment
Speaker: Gary Tian，Professor of Finance in the Department of Applied Finance at Macquarie University
Time: 10:30 a.m., April 16, 2025
Venue: Room 105, Building No.12, Wushan Campus 12
Introduction to the speaker:
Gary Tian has been a Professor of Finance in the Department of Applied Finance at Macquarie University in Australia since 2016. Before his current role at Macquarie, he served as a finance professor at the University of Wollongong and Deakin University. His research primarily explores corporate finance and governance, with a particular focus on the Chinese capital markets. His interests extend to ESG and business ethics, political connections, social identity in finance, CEO compensation, bank lending and informal finance, innovation, and investment efficiency. Over his career, Tian has published more than 90 articles in peer-reviewed journals. His recent publications include works in Management Science, Journal of Financial and Quantitative Analysis, Review of Accounting Studies, Journal of Management Studies, Journal of Business Ethics, Journal of Corporate Finance, Journal of Banking and Finance, the European Accounting Review, Auditing, the Journal of Business Finance and Accounting, and the British Accounting Review. He has successfully supervised over 25 PhD students. Currently, he is an associate editor for the Journal of Accounting and Finance.
Abstract：
This study investigates the impact of political patronage connections on local firms' investment decisions in China, utilizing changes in political connections resulting from official turnover. Our analysis reveals a substantial 36.92% increase in investment expenditures for firms in prefectures where local officials have patronage ties with provincial superiors. This effect primarily stems from performance incentives for prefectural officials, rather than collective corruption. Politicians' patronage networks promote trust and facilitate information sharing among officials at different levels. However, they may also distort incentives for subordinate officials, resulting in reduced investment efficiency among local firms.
