Political connections of Chinese fund management companies and fund performance

This study uses hand-collected information on shareholders’ backgrounds of mutual funds and their fund management companies (FMCs), administrative criminal penalties for insider trading as the proxy government regulation intensity. We fill a gap in literature by identifying positive relationship between funds’ performance proportion state-owned FMC ownership that becomes negative when Chinese increased its regulatory effort to reduce informational advantages from political connections obtained through this channel. Results are robust using DiD IV analyses, placebo tests, propensity score matching, Oster test missing covariates, channel alternate classifications.