This paper tests the proposition that politicians and their affiliated firms (i.e., firms operating in their province) temporarily suppress negative information in response to political incentives. We examine the stock price behavior of Chinese listed firms around two visible political events...

Using a sample of listed Chinese non-state-controlled enterprises (NSCEs) from 1999 to 2011, we show that NSCEs with political connections are less likely to engage high quality (big) auditors than similar non-connected NSCEs. These results suggest that connected NSCEs under Chinese state...