Research About The Influence Of The Political Connection On The Performance Of Listed Companies In China

Currently,political connection is a hot concept in the economics and management fields,the influence of the political connection on the enterprise and the government is great.The political connection can improve the opportunity in accessing to government subsidies of the enterprise;getting more bank loans;obtaining low tax rates and a series of incentives and benefits.At the same time,the enterprises need to pay a certain cost to establish and maintain the political connection,namely,the excess charge.How the political connection between enterprises and government effect the enterprise performance?For solving this problem,using the method of empirical analysis,this paper takes China's list corporation as the research sample and studies the influence of the political connection on the list corporation performance.First,the definition and the measurement method of the political connection are given.Then two major hypotheses about the influence of political connection on enterprises:"supporting hand"and "grabbing hand" are introduced.Secondly,2471 sample data of the listed corporation in 2009-2012 are selected to do some descriptive statistics and preliminary analysis on the status of the political connection and the corporation performance.An empirical analysis about the influence of political connection on corporation performance is studied by using multiple linear regression method.In the selection of the corporation's performance index,this paper adopts the classification of the previous scholars on corporation performance index,that is,the market performance and financial performance.At last,we select ROA and Tobin-Q as the evaluation indexes of the corporation performance.In the selection of political connection index,this paper establishes a background database of the listed corporation executives and measures the political connection using a virtual variable assignment method.At the same time,the total assets(log),the asset liability ratio,the concentration of corporate,which can affect the performance of the listed corporation,are selected as the control variables.The empirical results show that the listed corporations with political connection can get more government subsidies and take more social responsibility than those without political connection corporations.In China's listed corporations,political connections affect the performance of listed corporation,but the manner and extent of the affection is related to the nature of the ownership and the district environment.In the state-owned listed corporation,the political connection has a negative effect on firm performance,but not significant.In the private listed corporation,the political connection has positive effect on corporation performance,and the impact is significant.The influence of the political connection on the performance in developed regions is relatively weak.Finally,according to the results of empirical analysis,this paper proposes several suggestions on how to use political connections to promote China's listed corporation in upgrading the performance,specific include:the listed companies should improve the level of financial management and enhance the market competitiveness,complete the supervision and the information disclosure of listed company,restrict the political connection set up by law,propel the marketization and improve the performance and so on.