The Impact Of Political Relations And The Degree Of Regional Marketization To Over‐investment Level Of Private Enterprises

political relation exists in Chinese listed companies. Not only state-ownedlisted companies own political relations widely, but also the private companies arealso keen on the establishment of political relations.In China’s current economiccontext, State-owned enterprises get more resources from the county,anddevelopment of private enterprises are restricted, private entrepreneurs have soughtto establish political relations.They act as deputies to the NPC or CPPCC members,or serve in the Federation of Industry and Commerce, to seek to obtain moreresources and more opportunities for development.There are hand-collected date that if the chairman or general manager sets uprelations with government in private A-share listed companies from2008to2010,author use dummy variable to assigned0or1for these data to study the impact ofprivate companies’ political relations to over-investment. Results of this studyshow that the political relations of private listed companies increase the extent inover-investment significantly. Further, due to uneven economic and socialdevelopment in current situation, author divide all regions into two groupsaccording to regional market index. From Fan Gang and Wang Xiaolu.Then authorassigned0or1for these two groups, empirically researchs impact of privatecompanies’ political relations to the extent on over-investment in each group.Results of this study show that in those areas that degree of marketization is low,political relations increase the extent of over-investment of private companies moresignificantly.