In the Shadows of the Government: Relationship Building during Political Turnovers

We document that following a turnover of the Party Secretary or mayor of a city in China, firms (especially private firms) headquartered in that city significantly increase their “perk spending.” Both the instrumental-variable-based results and heterogeneity analysis are consistent with the interpretation that the perk spending is used to build relations with local governments. Moreover, local political turnover in a city tends to be followed by changes of Chairmen or CEOs of state-owned firms that are controlled by the local government. However, the Chairmen or CEOs who have connections with local government officials are less likely to be replaced

State Control, Legal Investor Protection, and Ownership Concentration: Evidence from China

National Natural Science Foundation of China [70588001, 70802002]; Ministry of Education of China [08JC630001]Empirical To control for the omitted-variables and aggregation biases problem existing in previous cross-country studies, our paper investigates the relationship of ownership concentration and legal investor protection across regions and over time in one emerging economy, China, during the period 1992 to 2003. Moreover, this paper examines whether state control affects this relationship. For state-controlled firms, we cannot find the typical inverse relationship between ownership concentration and legal investor protection documented by La Porta, Lopez-de-Silanes, Shleifer, and Vishny (1998), since state per se works as a substitute for formal legal investor protection in protecting property rights by exploiting political power. However, for non-state-controlled firms, the inverse relationship does hold. Our findings suggest that the nature of the controlling shareholder should be taken into account when examining the relationship between ownership concentration and legal investor protection. Moreover, our findings give new insights, especially to the study on other emerging economies that share similar characteristics with China in terms of legal development and government control. Finally, the cross-region study within one country provides a new perspective on the research in this area. First, to provide a level playing field for different types of investors, the state's dual role of controlling shareholder and political power holder should be separated. Second, it is important to build up a good legal system to protect investors in order for a country to develop its capital markets, especially for the development of the non-state sector

From Functional Plasticity of Two Diterpene Synthases (IrTPS2/IrKSL3a) to Enzyme Evolution

Terpenoids are an intriguing class of natural products with diverse structures and biological activities whose complexity stems in large part from terpene synthases (TPSs). These enzymes catalyze carbocationic cascade reactions wherein the groups responsible for quenching the final carbocation are generally not well-known. IrKSL3a and IrTPS2 from Isodon rubescens share 98% sequence homology but use distinct quenching strategies, with IrKSL3a catalyzing direct deprotonation to generate the olefin isopimaradiene while IrTPS2 adds water to yield the hydroxylated nezukol. In this work, we discovered a threonine and serine that hydrogen-bond the water to be added in IrTPS2. Site-directed mutagenesis and multiscale QM/MM simulations of modeled structures further reveal that the binding of this water is blocked by the introduction of a β-methyl-containing side chain in a neighboring residue. From these insights, it was then possible to engineer IrKSL3a to generate nezukol, with other new hydroxylated products also observed. Inspired by these mechanistic insights into the functional plasticity of IrKSL3a and IrTPS2, we explored the plausible evolutionary relationship of these kaurene synthase-like (KSL) TPSs, as well as prospective utilization of these plasticity sites discovered in IrTPS2/IrKSL3a. Such experiments with a variety of more phylogenetically distant KSLs demonstrated that these residues are necessary but not sufficient to efficiently introduce such an addition of water, emphasizing the selective pressure underlying the extended evolutionary process for the production of nezukol by IrTPS2