Do anti-corruption campaigns affect IPO underpricing?Evidence from a central discipline inspection of the CSRC in China

The system of central discipline inspections has become a key anti-corruption governance tool in China since 2013.This paper investigates the impact of a central discipline inspection of the China Securities Regulatory Commission(CSRC)on initial public offering(IPO)underpricing.We find that IPO firms listed during the inspection period exhibit greater IPO underpricing than those listed outside the inspection period.The reason is the increased focus of the CSRC on maintaining capital market stability,which makes it more inclined to approve IPO firms with lower issue prices during the inspection period compared with other periods.We also find that IPO firms listed during the inspection period have better short-term market performance but poorer long-term returns than those listed outside the inspection period.Moreover,the effect of the anti-corruption inspection on IPO underpricing is more pronounced for non-state-owned enterprises,firms with low-quality auditors and firms located in regions with high corruption.Overall,our paper enriches the literature on IPO underpricing and the economic consequences of the central discipline inspection system.

THE MAINLAND OF CHINA＇S PARTY DISCIPLINE INSPECTION COMMISSIONS： ANOTHER TYPE OF THE SPECIALIZED-ANTICORRUPTION-COMMISSION MODEL？

Given the comprehensive reforms of and the temporary good scores achieved by the Commissions of Party Discipline Inspection （CDIs）, it is important to understand these reforms to answer how long this anticorruption movement could last and whether it could finally succeed. Targeted at the CDIs＇ historical problems and the adapting problems of the specialized-anticorruption-commission model （SAC）, this article is composed of five parts, including： the historical non-specialized mission and the structural three-transform reform of the CDIs; the historical non-independence of the CDIs within the dual leadership framework, and its recent reforms; a new understanding of the sufficiency of the CDIs＇ capacity compared with China＇s Hong Kong＇s ICAC, a successful example of the SAC, to overcome the distance problem in adapting the SAC; recent reforms on the accountability and disclosures of the CDIs to overcome the time consistency problem; and the conclusions for current achievements, with brief discussions of recent anticorruption strategies and the limitations or unresolved issues, and the lessons to adapt the SAC.

Are foreign monks better at chanting? The effect of ‘airborne’ SDICs on anti-corruption

The independence of supervision agency is of great importance for anti-corruption.After the leadership transition of the provincial Congress of the Chinese Communist Party in 2006,Secretaries of Discipline Inspection Commission(SDICs)were suddenly dispatched from the centre or transferred from another province in China(‘airborne’SDICs)to enhance their independence in inspecting corruption cases.To investigate the effect of this policy reform,we collect data of SDICs and anti-corruption in 31 provinces from 2003 to 2014,and evaluate this policy using the difference-in-differences econometrics method.We find that there is no significant effect of these‘airborne’SDICs whether from the centre or another province on anti-corruption.This result is robust to different measurements of anti-corruption and subsamples.We argue that the dispatch of external SDICs is not enough to ensure the independence of supervision agency,because local discipline inspection commissions(DICs)are still subject to local Chinese Communist Party committees in terms of personnel,funds and property.This paper has important policy implications for the current anti-corruption campaign in China.