Following the 18th National Congress of the Communist Party of China, the central government elevated the construction of ecological civilization to a central position within national strategy and introduced environmental governance indicators as mandatory criteria for evaluating officials, alongside GDP. These indicators served as an additional "threshold" for performance assessments. In the context of changes in the central government's development ideology and policies, this study utilizes matched data on the turnover of municipal party secretaries and local enterprise carbon emissions from 293 prefecture-level cities in China between 1990 and 2021. The research finds that turnovers of municipal party secretaries after the 18th National Congress have led to a significant reduction in carbon emissions from local enterprises, a trend that was not evident prior to the congress. This effect is more pronounced in situations where official turnover is primarily driven by promotion incentives, and less influenced by collusive behavior between the government and enterprises. Further analysis reveals that the decline in carbon emissions is more significant for private enterprises, non-heavy polluting enterprises, those located in the eastern region, and those in general prefecture-level cities, before and after municipal party secretary turnovers. This study enhances understanding of the relationship between the promotion incentives of Chinese officials and the carbon emissions of local enterprises, offering valuable insights for improving the official promotion assessment system and advancing local carbon reduction efforts.

This paper explores the impact of government intervention on local analysts’ earnings forecasts, based on a scenario of financial misconduct in Chinese state-owned enterprises (SOEs). The results show that, under the influence of the government, local analysts’ earnings forecasts for SOEs with financial misconduct are less accurate and more optimistically biased. Further heterogeneity analysis reveals that forecast bias by local analysts is greater when officials have stronger promotion incentives, when regions are less market-oriented and have a larger share of the state-owned economy, and when SOEs contribute more to taxation and employment. In further analysis, we find that local analysts have a more optimistic tone in reports targeting non-compliant SOEs. Local analysts who depend heavily on political information will also issue more biased and optimistic forecasts on SOEs with violations. Finally, as a reward for achieving government goals, the local brokerages affiliated with these analysts and providing these optimistic forecasts are more likely to become underwriters in seasoned equity offerings of SOEs. This paper reveals that government intervention significantly influences analyst forecasts, providing implications for understanding the sources of analyst forecast bias.

This study investigates the compliance of local Chinese officials with the zero-Covid policy throughout the COVID-19 pandemic. By examining biographical data from political elites and using a prefecture-day data set on risk levels – an indicator reffecting the status of zero-Covid policy - we discover a significant impact of prefecture leaders’ promotion incentives on their response to COVID-19 outbreaks. Our empirical analysis reveals that leaders with stronger promotion incentives tend to exhibit increased reactions to emerging cases. Evidence shows that such a phenomenon is driven by the different choices of the prefecture leaders facing relatively larger-scale COVID-19 outbreaks. Furthermore, local governors whose jurisdictions are more economically developed tend to enforce more stringent mobility restrictions. However, for prefecture leaders who oversee more developed regions and possess strong promotion incentives, the combined effects of these two factors tend to balance each other out in terms of pandemic response. These results suggest a natural tension between demands for crisis management during the pandemic and routine performance in economic development within the political framework of China.

Using an extensive panel of Chinese firms from the Annual Tax Survey and relying on labor unrest as shock to local social stability, we show that state-owned enterprises (SOEs) react to nearby labor unrest by creating additional employment at the expense of firm performance. Each SOE exposed to unrest hires 3% more employees, which is a sizeable aggregated effect. This effect is larger when labor unrest occurs in the same industry as the exposed SOEs, when local governments have sound fiscal budgets, and when governing mayors have stronger promotion incentives. SOEs obtain more fiscal benefits when they absorb additional labor. In contrast, non-SOEs do not react to labor unrest, and their performance is unaffected. Similar effects are detected when we use the population of Chinese listed firms. This paper provides evidence that SOEs internalize the goal of maintaining social stability and contribute to the growth of the non-state sector.