Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 1, 2022 erstellt
Description:
Using the turnover of politicians in charge of nationwide IPO approval and the resulting “birthplace shock” during the approval process for IPO applicant firms in China, we identify the causal effect of politicians’ hometown favoritism on capital resource allocation. Hometown firms are on average 15 percentage points more likely to receive IPO approval. This favoritism is mainly driven by social preferences arising from politicians’ birthplace identity and not by rent-seeking or political motives. Moreover, hometown favoritism distorts resource allocation, as the effect of favoritism is more pronounced among lower-quality firms, and hometown firms experience lower post-IPO stock and operating performance