Research On The Motivation And Economic Consequences Of Chinese Listed Companies Participating In Targeted Poverty Alleviation

Since the 18th National Congress of the Communist Party of China,poverty alleviation has become the bottom-line task and landmark indicator for building a welloff society in an all-round way.It has been incorporated into the "five in one" overall layout and the "four comprehensive" strategic layout and has been pushed forward with unprecedented strength.The Decision of the CPC Central Committee and the State Council on Winning the Poverty Alleviation Battle,which was issued in November2015,put forward that the whole Party and the whole society should exert their strength to resolutely win the battle of poverty alleviation,ensure that by 2020,the rural poor under the current standards will be lifted out of poverty,all the poor counties will be removed from the poverty list,and the regional overall poverty will be well solved.Consequently,poverty alleviation has become one of the most important political tasks of the central government and governments at all levels in recent years.After a preliminary investigation of the participation of Chinese listed companies in this national poverty alleviation battle,we find that both state-owned listed companies and private listed companies have shown great enthusiasm for this event and have made great resource input.However,in a pure market environment,the poverty alleviation behavior itself can hardly be viewed as a rational choice for enterprises.Therefore,we believe that the key reasons for the active participation of these enterprises in poverty alleviation should come from some deeper institutional factors.We manually collected the information related to targeted poverty alleviation of A-share listed companies in Shanghai and Shenzhen stock markets in 2016 and 2017,from their annual reports,social responsibility reports and company announcements and then collated and constructed a targeted poverty alleviation database containing important data such as the amount of poverty alleviation investment those Chinese listed companies made,the location to where they made those investment and so on.Based on this database,combining with the relevant formal and informal institutional background in our current society,we make theoretical analysis and empirical tests,respectively for state-owned listed companies and private listed companies,from the perspective of their motivation to participate in targeted poverty alleviation,the characteristics of their poverty alleviation behavior caused by these motivation,and the further economic consequences caused by their poverty alleviation behavior,so as to try to reveal the deeper institutional inducement behind their active participation.First,this paper studies the behavior of state-owned enterprises participating in targeted poverty alleviation.The main empirical results show that the promotion motivation of officials is the main reason for state-owned enterprises to participate in poverty alleviation.Specifically,the higher the promotion possibility of the officials in the location of the state-owned enterprises is,the stronger the poverty alleviation incentive is for the local government officials and the executives of the state-owned enterprises.Therefore,these state-owned enterprises are more likely to participate in the poverty alleviation work,and the amount of their poverty alleviation investment is higher.Compared with private enterprises,the investment of state-owned enterprises' poverty alleviation funds is also more concentrated in the jurisdiction of the local officials.Moreover,in hindsight,poverty alleviation participation of SOEs can indeed help local officials and executives of SOEs to get political promotion.However,since the poverty alleviation decisions of SOEs are more likely dominated by the consideration of the personal promotion interests of officials and executives of SOEs,rather than the consideration of the economic benefit maximizing goal of enterprises,which is detrimental to the company's value in the long run,investors have given a significantly negative market response.Next,we turn to private enterprises and study their participating behavior in targeted poverty alleviation.The main empirical results show that self-protection motivation is one of the most important reasons for private enterprises to participate in poverty alleviation.Specifically,compared with the low sensitive private enterprises,the highly sensitive private enterprises with stronger self-protection motivation are more likely to participate in poverty alleviation,and the amount of their poverty alleviation investment is also higher.Corresponding to the extensive social attention that the highly sensitive private enterprises receive,their poverty alleviation behavior must have a strong identification,in order to truly achieve the purpose of strengthening their own property rights protection.Therefore,compared with the low sensitive private enterprises,the highly sensitive private enterprises are more likely to concentrate their poverty alleviation investment on poverty-stricken areas mentioned in the poverty alleviation symposium.Getting positive report from central media is an important channel for those enterprises that participated in poverty alleviation to gain political and social recognition.Compared with the private enterprises that did not participate in poverty alleviation or had less investment in poverty alleviation,the private enterprises that actively participate in poverty alleviation got more positive reports from the central media,and the more investment they made in poverty alleviation,the more positive reports from central media they got.From the perspective of economic consequences,we find that the poverty alleviation behavior of private enterprises is conducive to the strengthening of their own property rights protection.As a result,the incentive for these private entrepreneurs to operate enterprises with maximum efficiency has been enhanced.More R&D investment therefore has been made.As an important intermediate mechanism for the private enterprises that participated in poverty alleviation to strengthen their own property rights protection,the political identity represented by the positive reports from central media further strengthens the positive correlation between their poverty alleviation funding and the incremental R&D investment.In general,under the informal institutional constraints of collectivism values in China,private enterprises with sensitive characteristics are more impressionable to the economic consequences of violating collectivist values and not participating in poverty alleviation.In other words,the poverty alleviation behavior of these private enterprises is motivated by their property rights self-protection intention,which is beneficial to the company's value in the long run.Investors therefore have given a significantly positive market response.The contribution of this paper mainly include the following five aspects:(1)Following the theoretical thought of Tullock(1965),this paper takes advantage of the research opportunity provided by the current national poverty alleviation event in China,and makes an in-depth analysis of the poverty alleviation behaviors of SOEs from the perspective of local officials' and SOEs executives' personal promotion motivation.The relevant research findings can help scholars have a deeper understanding for the behavior patterns of individual political person in the government,as well as the internal operating mechanism of the government,providing a new and personal level perspective for the subsequent study of the relevant literatures on state-owned enterprise behavior.(2)As poverty alleviation is one of the most urgent tasks in China's national strategy at this stage,this paper points out that a political promotion tournament among local governments based on their poverty alleviation achievement is currently under way.Through theoretical analysis and empirical test,we further verify the important role of political promotion tournament system in encouraging SOEs to actively participate in poverty alleviation.It not only provides new empirical evidence for the theory of "political tournament " in the new era,but also further enriches and develops the theoretical connotation of "political tournament" in Zhou(2004,2007).(3)We point out that the collectivism values,which is one of the main informal institution in the our current society,together with the support and guarantee of the formal political institution to this collectivism values,makes the behavior of private enterprises in China largely constrained and motivated by the above systems,as any behavior that is against the collectivism values may threaten the security of their private property rights.Using the research opportunities provided by the current national poverty alleviation event in China,this paper shows that under the constraint of the collectivism values,the self-protection motivation of private enterprises(especially for the high sensitive private enterprises)is one of the most important reasons for their participation in poverty alleviation,proving that the collectivism values as an informal institution in China has a crucial impact on private enterprises.This conclusion is of great significance for understanding the deep-seated institutional reasons behind the corporates' behavior in China.On the one hand,it provides new and important ideas on the informal institutional level for the follow-up research on the relevant literature of corporate behavior in China,and on the other hand,it also makes a useful supplement for the transnational research in the field of informal institutions.(4)According to the research and analysis on corporate social responsibility in the existing literature in China,the motivation of Chinese enterprises to take social responsibility mainly includes political motivation,altruistic motivation and reputation motivation.Considering the collectivist values in China,we proposed and verified the self-protection motivation of private enterprises to participate in poverty alleviation,which is quite different from the above three types of motivation,thus enriching and expanding the relevant literature in the field of corporate social responsibility.(5)We point out that the promotion motivation of officials and self-protection motivation of entrepreneurs are respectively the important reasons for the participation of state-owned enterprises and private enterprises in poverty alleviation,and the effective play of the incentive role of these motivation depends on certain incentive guarantee mechanism.For state-owned enterprises,only when poverty alleviation can really help officials and executives of SOEs to be promoted,can their enthusiasm to participate in poverty alleviation be guaranteed.As for private enterprises,only when poverty alleviation can help them get more positive reports from the central media,so as to improve their social and political recognition,can their enthusiasm to participate in poverty alleviation be ensured.These conclusions have important policy implications for how to fully motivate enterprises to participate in poverty alleviation at this stage in China.