Research On The Influence Of Political Connection Of Listed Companies On Firm Value

Through empirical Domestic and foreign literature tests found that political connection can help enterprises get a series of scarce resources,and will get more social attention.This paper studies the impact of political connection on the behavior of related party transactions and the microcosmic mechanism of the effect of this kind of behavior on the firm value in the case of the A-share listed companies from the year 2010 to 2015.In this paper,used Tobin Q value as the alternative value of the firm value,tested the impact of political connection on the firm value.Studied the influence of political connection on related party transactions from the perspective of reputation theory and signal transmission theory,and tested the effect of political connection on the firm value.We also analyzed the difference of the influence of political connection on private enterprises and state-owned enterprises.In order to distinguish the nature of the related transactions,We choose to learn from the model of scholars Jian and Wong(2010)[1].The empirical results show that the related party transactions will significantly negatively affect the firm value.After distinguishing the nature of the related party transactions,it is found that the fair related party transactions will positively affect the firm value.While the abnormal related party transactions plays a negative role in the firm value.Political connection will significantly curb abnormal related party transactions and promote fair related party transactions.This shows that the political connection to a certain extent able to identify the nature of related party transactions.According to resource effectiveness political connection play a positive role in the firm value,and by dampen the negative effects of related party transactions on firm value,it directly influences firm value.After distinguishing the ownership of the enterprise,it is found that the political connection has different influence on the related party transactions.There is different effect of political connection on firm value and its main realization path between state-owned enterprises and private enterprises.