A Study On The Political Linkage And Investment Behavior Of Private Enterprises In The Background Of Enterprise Donation

Political connection generally refers to the close political ties established between enterprises and the government,enterprises seeking political affiliation are common in all countries in the world.In our developing country which is from the planned economy to the market economy,the government still plays a vital role in the market,which has a significant impact on the production and operation of enterprises and the market competition.Compared with the state-owned enterprises,private enterprises have natural disadvantages,so the private enterprises generally seek to establish a political connection with the government in order to gain a competitive advantage,to obtain the necessary resources for sustainable development,such as low interest rate and binding threshold,lower industry threshold,more favorable tax policies;private enterprises through political connections can get some competitive advantages,but also because the political association makes the enterprise’s own investment decision-making to a certain extent.The choice of ways to establish political connections is now becoming more and more common through charitable giving.Corporate charitable donations rnot only to establish a positive corporate social image of the purpose,more importantly,to meet the relevant demands of the government,virtually with the government reached a tacit understanding,making the government and enterprises to achieve a win-win situation,political affiliation thus established.Therefore,this paper uses the corporate charitable donation as a variable to measure the political connection.Thus,the study of political relations on the impact of China’s private enterprise investment behavior,not only has important theoretical significance,but also has important practical significance.In this paper,all the listed companies in 2011-2015 A-share private enterprises as the original sample,on the basis of the original sample of the financial industry,ST companies and no main business and other related samples obtained after 6048 groups of empirical data samples,the establishment of political Investment,diversification and overinvestment as the dependent variable,to study the influence of political connection on the investment behavior of private enterprises.The final results of this paper show that:First,political connection has a significant impact on the investment behavior of private enterprises in China.Under the control of other conditions,the political affiliated enterprises have more external financing facilities than the political affiliated enterprises because of the preferential policies of financing interest rates and the liberalization of financing conditions and financing constraints.,Thus reducing its dependence on the amount of internal financing,and ultimately lead to political affiliated enterprises have lower investment-internal cash flow sensitivity.Political linkages can not only reduce corporate investment-internal cash flow sensitivity,but also lead to more investment spending,but also make enterprises more inclined to diversified investment.This is mainly because the political connection can help enterprises to obtain financing facilities,but also enable enterprises to enjoy tax incentives,lower barriers to entry of the industry’s access to more investment information and a series of government support.Second,political connections to enterprises to expand investment spending,but also reduces the investment efficiency of enterprises,mainly in the excessive investment companies.Political affiliated enterprises are more prone to over-investment than political affiliated enterprises,and the stronger the level of political connection,the more excessive investment.This is mainly due to two reasons:on the one hand the political affiliated enterprises in order to establish or consolidate its political level,had to force the government to pressure the local government but in favor of the enterprise itself adverse investment,to help local government officials to achieve them Of the performance evaluation objectives.Political affiliated enterprises are not conducive to the value of these enterprises to maximize their own investment,it is easy to cause excessive investment in enterprises.On the other hand,the political affiliated enterprises because of the government behind the support of corporate executives tend to produce over-confidence,overestimate their ability to over-judge the success rate of investment,resulting in excessive investment.Third,the regional factors have a significant impact on the relationship between political affiliation and overinvestment in private enterprises.The positive correlation between political affiliation and overinvestment in the central and western regions is more significant than in the eastern regions.This is mainly because compared with the eastern developed regions,the central and western regions because of the economic development of the eastern region,the market-oriented reform is not thorough enough,the government information is not open and transparent,the government plays an important role in the market,the central and western private enterprises to the government The degree of dependence and the close relationship with the government,these factors lead to enterprises in the central and western regions,the relationship between political and excessive investment is more positive than the eastern part of the enterprise is more significant.