Empirical Study Of The Politics Associated With The Enterprise Value Of The Listed Companies In China

As the largest developing country, China is being in the high degree of concentration the planned economy to the market economy reforming stage, simultaneously administrative type governance of Chinese listed companies show gradual weakening, but the system environment is very difficult to adapt the high economy government. As an alternative mechanism, political association will be to some extent compensate for the imperfections of the system environment. In this paper, the authors measure the political association degree by endowing the first ten biggest shareholders value taking advantage of power distance, and adjusting it according to the proportion of shares held by them, combined with the political background of executives, the introduction of market-oriented corporate governance index as environmental indicators, and have carried on the exploring analysis to between the enterprise politics connection and the value relations. The results indicate that:(1) the political association degree decreases with the time, (2) in the eastern area, where the economy is well developed, this degree is low, while in the western area, it is higher relatively, (3) the degree of political association in industries under the control of the governance is high, while in the competitive industries, it is lower relatively. Company executives' government assignment background does not have the remarkable influence to the enterprise value; Company deputy to the National People's Congress executives the background (including commissar of the Chinese People's Political Consultative Conference, Party Convention represents) has not had the immediate influence to the enterprise value. Generally, the relation between political association degree of listing companies and corporate performance is reverse U shaped; executives of listed companies on the political background do not produce significant effect on corporate value, but executives of the central political background has a positive effect on enterprise value, executives of the local political context has a negative effect on corporate value.