Last Term Of Local Officials:earning Reputation Or Conservation

This article uses the last term of local officials as a research background,and discusses the following questions from the perspective of the operating budget of the enterprises in their jurisdiction:In addition to promotion incentives,how reputational incentives will affect the behavior of local officials.Local officials at all levels play an important role in promoting China’s economic transformation and development,and promotion incentives are the mian motivation.In order to get promotion incentives,local officials tend to set higher economic growth targets.In order to exceed GDP growth,they will naturally assign tasks to enterprises in the jurisdiction,which may affect the establishment of budget targets for enterprises in the jurisdiction.The term of office of local officials in our country is relatively flexible.Existing studies have found that the actual term of local officials is usually 3 years.As the retirement period approaches,that is,the last term of local officials,promotion incentives will disappear.This provides a better research scenario for this article,which can help us observe whether other incentives will work after the promotion incentives disappear.Will local officials tend to be more conservative because they are hopeless for promotion,or will they be more active in pursuit of the good political reputation of "after the politicians go,in public opinion chatting"?It is an important issue worth discussing.This article refers to the behavior that tends to be negative as "Conservation" and behaviors that pursue reputation as " Earning Reputation".Considering that the enterprise operating budget can provide more stable quantitative indicators,the article finally selects the enterprise operating budget indicators of the jurisdiction for empirical investigation.According to the corporate operating budget data collected manually from the annual reports of Shanghai and Shenzhen A-share listed companies from 2003 to 2017,this article focuses on the impact of the last term of local officials on the growth of budget revenue,budget slack and budget completion of enterprises in the jurisdiction.The results of the study found that when the promotion incentives of local-level city officials disappeared,reputation incentives would rise to be the main incentives,and officials will not behave relatively conservative because of hopeless promotions.Under the mutual game between the government and the enterprise,the growth rate of the enterprise’s budget revenue will increase and the budget slack will decrease,but the enterprise’s budget completion will also decrease,that is,the high budget target of the enterprise in the jurisdiction will not be completed well during the last term of the local official.Subsequently,in the robustness test,the following two works were carried out in this paper:(1)The samples were grouped according to the nature of property rights,political relevance,and level of rule of law.It was found that local officials in the last term of office had a greater influence on the operating budgets of non-central enterprises,political connections,and sample enterprises with lower levels of the rule of law.(2)Use Propensity Score Matching(PSM)to solve possible endogenous problems.After matching,it was found that the multiple regression results were still stable.Extensive analysis part this article deeply explores the reasons for the decrease in the budget completion of the enterprises in the jurisdiction,and finds that in the last term of the local officials:(1)Even if the budget completion of the enterprise is improved,it will not be able to obtain more financial subsidies and taxes in the next year,and the director’s salary will not increase.(2)Even if the enterprises budgets is not meet the standard,it will not cause the management to change more frequently in the next year.(3)Managers could have used earnings management to improve budget completion,but the final term of local officials will reduce the behavior of enterprises in their jurisdictions to complete budgets.This study has enriched the time dimension literature of local officials’ behavior research and gave us a new understanding of the incentives of officials.This not only has a certain enlightenment significance for the management of the system regulations for retired cadres in the future,but also has a certain reference significance for the management of enterprise operating budget.