Research On The Path Of Political Connections On The Impact Of The Value Of Private Enterprises

Chinese private enterprises have become an important part of the nationaleconomy, they are related to the sustainable development of China’s economy.However, due to the imperfect legal system and financial system in our country, thegovernment’s configuration of social resources is still play an irreplaceable role.Therefore, private entrepreneurs keen to establish political connections in order to getthe advantage resources, such as more bank loans and longer the duration of the loan,lower tax rates and easier access to government regulation of industry and otherbenefits. Many researchers have found political connections would have an importantimpact on the enterprise’s value. But there is no consistent conclusion on politicalconnections can promote the enterprise’s value or damage enterprise’s value.This paper takes2008-2012private listed enterprises as samples, put forwards thehypothesis of political connections and the performance of the private enterprise withresource dependence theory, rent-seeking theory and the theory of social capital asguide. Then, use multiple linear regression equation to study the influence of politicalconnections made on enterprise’s performance. And futher analyese moderating effecttest to explore the paths that political connections impact on enterprise’s performance.The results found that, political connections can improve the performance of privateenterprises. The moderating effect of the financing convenience and preferential tax isremarkable and the moderating effect of financial assistance is not significant. Weconclued that political association can improve corporate value through financingconvenience and preferential tax paths.Therefore, this article puts forward policy suggestions from the perspective ofenterprises and the government, including enterprises should actively seek politicalassociation, improve their own competitiveness and so on. In this paper, we study theimpact of the political connections of social resource allocation. It is conducive toreveal the economic consequences associated with political connections and providetheoretical guidance for the government to improve the distribution mechanis m ofsocial resources.