LAUSR

ABSTRACT Using data on the turnover of provincial Party secretary and interregional capital flows in China, this paper investigates the impact of officials’ turnover on capital flows. We find that there are fewer capitals inflowing into the province during the year with officials’ turnover, and it persists after considering selection bias and multiple robustness checks. When the outgoing officials have longer tenures or are not promoted and the new officials are non-native-born, the effect is larger. The impact of officials’ turnover is more pronounced in provinces with lower investor protection, lower corruption level or more non-state economy. Finally, officials’ turnover can decrease capital formation through reducing capital flows.