Friday, October 12, 2018

Department Seminar Series - DANQING WANG - UNIVERSITY OF HONG KONG - Tuesday, October 16th 2018

The Management Department
Department Seminar Series


University of hong kong

 Tuesday, October 16th 2018

Level 3 board room at 4:00 pm in Singapore
10:00 a.m in Cergy Room N231

Theme“Political Leaders, Career Concerns and FDI Inflows”

   Abstract: Host governments’ role in influencing companies’ location choice for foreign direct investment (FDI) has been studied much more than the impact of individual leaders in these governments. Extending agency theory to an authoritarian government, we study how career concerns motivate local leaders to drive FDI inflows as one of the goals delegated by their superiors. We theorize that certain conditions may enhance the motivating effect of career concerns: individual and regional characteristics that increase leaders’ tendency to take risks and the alignment of leaders’ and their superiors’ interests. We test this framework by examining Chinese city leaders and FDI inflows into their cities from 2000–2010. In China, political leaders’ careers largely depend on local economic growth. Because newly appointed leaders have better prospects for promotion, they should have stronger incentives than incumbent leaders to work toward their supervisors’ interests. Using a difference-in-differences approach, we find that newly appointed leaders attract more FDI inflows to their cities than incumbent leaders. This effect of political incentives is stronger for newly appointed leaders who are younger and have political connections with their direct superiors, and also for cities with weaker previous economic performance. We contribute to location studies by highlighting the role of political incentives and political leaders’ characteristics in shaping intra-national differences of FDI inflows. We also discuss theoretical implications for agency and institutional theories.