Table A1 Variable definitions Variable...

Table A1

Variable definitions

Variable	Definition
City-level variables
$T U R N O V E R$	A dummy variable that takes a value of one if there is a change of CCP head or mayor in year $t$ for a city, and zero otherwise. If an official change occurs in the first (second) half of year $t$ ⁠, the turnover is considered as occurring in year $t$ (year $t + 1$ ⁠)
$T U R N O V E R_H E A D$	A dummy variable that takes a value of one if there is a change of CCP head in year $t$ for a city, and zero otherwise. If an official change occurs in the first (second) half of year $t$ ⁠, the turnover is considered as occurring in year $t$ (year $t + 1$ ⁠)
$T U R N O V E R_M A Y O R$	A dummy variable that takes a value of one if there is a change of mayor in year $t$ for a city, and zero otherwise. If an official change occurs in the first (second) half of year $t$ ⁠, the turnover is considered as occurring in year $t$ (year $t + 1$ ⁠)
$T U R N O V E R_B O T H$	A dummy variable that takes a value of one if there is a change of CCP head and mayor in year $t$ for a city, and zero otherwise. If an official change occurs in the first (second) half of year $t$ ⁠, the turnover is considered as occurring in year $t$ (year $t + 1$ ⁠)
$A G E$	Natural log of prefecture-city officials' age prior to the turnover year
$T U R N O V E R_P E E R$	Mean value of prefecture-city official turnover of other cities in the same province in year $t$
$G D P$	A city's real GDP growth rate
$U N E M P$	A city's unemployment rate
$E X T E R N A L$	A dummy variable that takes a value of one for the head or mayor is replaced with an external appointment and zero otherwise
$U N E X P E C T E D$	A dummy variable that takes a value of one for the head or mayor severs the position for less than five years and zero otherwise
$L M K T I D E X$	A dummy variable that takes a value of one if a firm is located in a region with a below-median marketization index, and zero otherwise. The marketization index measures the levels of institution development, with a lower value indicating a weak institutional environment
Firm-level variables
$Δ l n X O P R$	The change in the natural logarithm of operating costs, calculated by costs of goods sold plus other operating expenses (i.e. selling, general, administrative costs, and research and development expenses)
$Δ l n S G & A$	The change in the natural logarithm of selling, general and administrative costs
$Δ l n R & D$	The change in the natural logarithm of research and development expenses
$Δ l n C O G S$	The change in the natural logarithm of cost of goods sold
$Δ l n S A L E$	The change in the natural logarithm of sales
$l n A I N T$	The natural logarithm of total assets to sales
$l n E M P I N T$	The natural logarithm of the number of employees to sales
$D$	A dummy variable that takes a value of one if sales decreased in year t, and zero otherwise
$L A G D$	A dummy variable that takes a value of one if sales decreased in year t − 1, and zero otherwise
$S O E$	A dummy variable that takes a value of one for a state-owned enterprise, and zero otherwise
SMALL	A dummy variable that takes a value of one for a firm with total assets below the sample median in year t, and zero otherwise

Variable	Definition
City-level variables
$T U R N O V E R$	A dummy variable that takes a value of one if there is a change of CCP head or mayor in year $t$ for a city, and zero otherwise. If an official change occurs in the first (second) half of year $t$ , the turnover is considered as occurring in year $t$ (year $t + 1$ )
$T U R N O V E R_H E A D$	A dummy variable that takes a value of one if there is a change of CCP head in year $t$ for a city, and zero otherwise. If an official change occurs in the first (second) half of year $t$ , the turnover is considered as occurring in year $t$ (year $t + 1$ )
$T U R N O V E R_M A Y O R$	A dummy variable that takes a value of one if there is a change of mayor in year $t$ for a city, and zero otherwise. If an official change occurs in the first (second) half of year $t$ , the turnover is considered as occurring in year $t$ (year $t + 1$ )
$T U R N O V E R_B O T H$	A dummy variable that takes a value of one if there is a change of CCP head and mayor in year $t$ for a city, and zero otherwise. If an official change occurs in the first (second) half of year $t$ , the turnover is considered as occurring in year $t$ (year $t + 1$ )
$A G E$	Natural log of prefecture-city officials' age prior to the turnover year
$T U R N O V E R_P E E R$	Mean value of prefecture-city official turnover of other cities in the same province in year $t$
$G D P$	A city's real GDP growth rate
$U N E M P$	A city's unemployment rate
$E X T E R N A L$	A dummy variable that takes a value of one for the head or mayor is replaced with an external appointment and zero otherwise
$U N E X P E C T E D$	A dummy variable that takes a value of one for the head or mayor severs the position for less than five years and zero otherwise
$L M K T I D E X$	A dummy variable that takes a value of one if a firm is located in a region with a below-median marketization index, and zero otherwise. The marketization index measures the levels of institution development, with a lower value indicating a weak institutional environment
Firm-level variables
$Δ l n X O P R$	The change in the natural logarithm of operating costs, calculated by costs of goods sold plus other operating expenses (i.e. selling, general, administrative costs, and research and development expenses)
$Δ l n S G & A$	The change in the natural logarithm of selling, general and administrative costs
$Δ l n R & D$	The change in the natural logarithm of research and development expenses
$Δ l n C O G S$	The change in the natural logarithm of cost of goods sold
$Δ l n S A L E$	The change in the natural logarithm of sales
$l n A I N T$	The natural logarithm of total assets to sales
$l n E M P I N T$	The natural logarithm of the number of employees to sales
$D$	A dummy variable that takes a value of one if sales decreased in year t, and zero otherwise
$L A G D$	A dummy variable that takes a value of one if sales decreased in year t − 1, and zero otherwise
$S O E$	A dummy variable that takes a value of one for a state-owned enterprise, and zero otherwise
SMALL	A dummy variable that takes a value of one for a firm with total assets below the sample median in year t, and zero otherwise

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