Political uncertainty in the tourism industry: Evidence from China’s anti-corruption campaign

In this paper, we investigate the political uncertainty in China’s tourism industry using China’s anti-corruption campaign as an exogenous shock. We find that when the Chinese government launched its anti-corruption campaign, firms in the tourism industry experienced a significant decline in firm value, and the effect was stronger for companies majoring in high-end tourism products. In addition, we found that tourism companies’ long-term financial performance declined after the anti-corruption campaign. Further analysis suggests that the decrease in firms’ financial performance was driven by a decline in demand rather than an increase in cost. Our paper suggests that political uncertainty affects the tourism industry in emerging markets. It also details the theoretical contributions and practical implications of the findings.