Corporate Performance,Political Relevance And Executive Change

Political connection is a kind of special relationship between government and enterprise,which is based on the political rights.It can not only bring the financing and tax benefit to the enterprise,but also help the enterprise get the government subsidy and the industry access to qualifications and other aspects of the benefits,so this relationship is widespread in the various countries of the company.Compared with the inherent advantage of the government of the state-owned enterprises,the desire of the private enterprises to appeal to the government is more intense.Generally speaking,private enterprises are generally through the employment of political backgrounds of the way to get the government contact,so the private enterprise's political background of the study is more meaningful.Private enterprises contribute to the economic development of china.By the end of 2016,the private economy contributed to China's total GDP more than 60%,tax revenue more than 50% and employment more than 80%,which has become an important force in China's sustained and healthy economic development and tax revenue growth.Based on the related literature at home and abroad,this paper takes private listed company of direct listed in China for the study sample.and then divided the executive change into mandatory change and change under two different modes.In order to ensure the accuracy of the research results at the same time,we use probit model and logit model to test the sample data respectively.The first is to explore the performance of the company executive changes,and the political background of executives forced change influence and relationship of the performance sensitivity;then it discusses when there are other alternative political connections in the board of directors,executives and political background of the forced change influence mechanism and industry performance sensitivity will occur big difference.At the same time,this paper further studies the role of the executive political background in the family business of different types of family background.Finally,this paper examines the effect of political connections on the change of executive turnover and performance sensitivity under different external macroeconomic environment.The results showed that:(1)In private listed companies,the relationship of corporate performance and the executives of the mandatory change significantly are negative correlation,the better the performance of the company,the smaller probability of company executives were forced to replace;the worse the performance of the company,the larger probability of company executives were forced to replace;(2)The probability of executives being replaced with political the background is smaller in private listed companies,at the same time executives' political connection has significant inhibitory effect on the change of sensitivity and performance,namely political connections weaken the negative relationship between executive turnover and firm performance,thus undermining the constraints of corporate internal governance mechanism of executives;(3)If there are other alternative the political rights of the board of directors of the company,then the inhibitory effect on the political background and the performance of the sensitivity of the compulsory change will be weakened.(4)If the CEO has a family background,the inhibition of the executive political context on the sensitivity of its mandatory change and performance will be weakened.(5)Under the influence of the external economic environment,the influence of the political connection on the change of the compulsory change and the sensitivity of the executive is more obvious in the environment of the economic development in the environment of macroeconomic growth.This study provides a new perspective for the further study of the mechanism of the influence of political connections on executive turnover and firm performance.At the same time,it is of great value for us to deeply understand the economic consequences of the political connections of the private enterprises in China.It also provides the experience for the corporate governance of private enterprises and the reform of the system of selecting and hiring executives.