The Research On The Performance Of SME Listed Firms Affeted By Political Connections

Two decades’rapid growth has made China’s private enterprises a crucial part in national economic development.But it is very common for small and medium-sized private enterprises have been suffering unfair treatment from law and polic- y.Therefore,to build and maintain political connection has become one of the important methods. There are some researches on the economic consequences of political connection,On the basis of them,This paper discusses the influence of different regions and different positions’political connection on the corporate performance,which enriches the research of political connection.This article based on related resources theory and principal-agent theory,uses a sample of SME listed from 2007to 2009 in Shenzhen stock markets,sets the ROA、EPS as the dependent variable.By thinking about the road of acquired,institutional back- ground and other characteristics of political connection,we make an exploring research on the relationship between the political connection and the financial performance of SME listed. The study found that firms with political connected executives have negative influence on the performance,but the political connected chairman significantly increased the business performance. Meanwhile the government intervention has obvious impact on the effective of political connection. Along with the increase of government intervention level, the political connection enterprise established can bring more key resources and enhance the performance.The conclusion means that the chairman should actively develop its political connection to bring more benefits;it is not necessary for the enterprise employ executives having political background,considering the costs. This study provides us a relatively complete framework with SME listed performance and political connection .It help us understand the relationship between the government and enterprises,and improve the private enterprises efficiency.