Document Type
Journal article
Source Publication
Journal of Corporate Finance
Publication Date
12-1-2014
Volume
29
First Page
430
Last Page
448
Publisher
Elsevier BV
Keywords
Conspicuous wealth; Fairness; Market reaction; Government reaction; Philanthropy
Abstract
In some cultures vast personal wealth is lauded whereas in others, it is viewed with suspicion and contempt. In recent years, a super rich elite of business people has emerged in China, and, given the country's cultural and socialist past, we believe that people are more likely to react negatively to reports of conspicuous wealth. To test our arguments, we examine the reactions to and consequences of China's entrepreneurs being included on the Hurun Rich List. We find negative consequences for stock market traded firms controlled by the Rich List entrepreneurs: stock prices decline, government subsidies are reduced, and the named entrepreneurs are more likely to be investigated. These effects are strongest in rent-seeking industries and are mitigated by philanthropy.
DOI
10.1016/j.jcorpfin.2014.09.004
Print ISSN
09291199
E-ISSN
18726313
Funding Information
Firth acknowledges financial support from a grant from the Government of the HKSAR (LU390113). Xianjie He acknowledges financial support from the National Natural Science Foundation of China (No. 71202003; No. 71472113) and the MOE Project of Key Research Institute of Humanities and Social Sciences at Universities (No. 11JJD790008). Oliver M. Rui acknowledges financial support of a CEIBS research grant and a National Science Fund Committee of China (No. 71372203) grant. Tusheng Xiao acknowledges financial support from the National Natural Science Foundation of China (No. 71402197) and the Beijing Municipal Commission of Education “Joint Construction Project” and “Pilot Reform of Accounting Discipline Clustering”.
Publisher Statement
Copyright © 2014 Elsevier B.V. All rights reserved.
Access to external full text or publisher's version may require subscription.
Full-text Version
Accepted Author Manuscript
Language
English
Recommended Citation
Firth, M., He, X., Rui, O. M., & Xiao, T. (2014). Paragon or pariah? The consequences of being conspicuously rich in China's new economy. Journal of Corporate Finance, 29, 430-448. doi: 10.1016/j.jcorpfin.2014.09.004
