The Influence of Party Organization’s Participation in External Governance on the Innovation of China’s State-Owned Enterprises

Abstract

Under unique institutional background, the governance of China’s state-owned enterprise (SOE) has a distinctive characteristic. The paper aims at researching the impact of Chinese Communist Party’s participation in external governance on the innovation of China’s state-owned enterprises. Since the 18th National Congress of the Communist Party of China, the Central Commission for Discipline Inspection began to inspect the central state-owned enterprises. The paper uses the political event as natural experiment to research the impact of inspections on corporate innovation, which is an important external mechanism of corporate governance. Through the test of multi-period difference-to-differences (DID) model, the empirical results show that the inspection of the Central Commission for Discipline Inspection promoted the innovation of central state-owned enterprises.