Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments August 20, 2022 erstellt
Description:
Using hand-collected data on violations of environmental regulations by heavily polluting firms in China, we examine the relationship between political connections and the probability of punishment for breach of such regulations. To this end, we exploit a regulatory reform, the enactment of Rule 18 in October 2013, which required politically connected independent directors to resign from their positions. Using difference‐in‐differences specifications, we find that firms from which politically connected directors resigned due to Rule 18 experience a significant increase in both the likelihood of ever being punished for environment-related violations and the frequency of punishment. The effect of Rule 18 is more pronounced among firms located in regions with less efficient judicial systems and high levels of corruption, and also among firms that are not state-owned