This paper examines the benefits of having an executive or director elected as a fellow of the Chinese Academies of Sciences and Engineering (i.e., a star academician). Evidence indicates that markets react positively to news of company executives/directors being elected. We further document that having a fellow spurs innovation, brings additional government subsidy, increases Tobin's q, lowers costs of capital, attracts analyst attention, and suppresses audit fees in the years following successful elections. These outcomes appear to be largely driven by fellows who (i) are executives rather than non-executive directors, and (ii) have held no government office.

We study favoritism via hometown ties, a common source of favor exchange in China, in fellow selection of the Chinese Academies of Sciences and Engineering. Hometown ties to fellow selection committee members increase candidates’ election probability by 39 percent, coming entirely from the selection stage involving an in-person meeting. Elected hometown-connected candidates are half as likely to have a high-impact publication as elected fellows without connections. CAS/CAE membership increases the probability of university leadership appointments and is associated with a US$9.5 million increase in annual funding for fellows’ institutions, indicating that hometown favoritism has potentially large effects on resource allocation.