Research On The Impact Of Senior Executive Political Connection On Corporate Performance In GEM Listed Companies

Due to China's special political and economic system background,political connections are widely existed in various types of enterprise organizations.In addition to the political background of state-owned enterprises,many private companies have also established political connections to obtain certain scarce resources,and hope to resources are rapidly transformed into direct or indirect economic benefits to help the company grow and develop.Many scholars have also proved through empirical research that political connections have a significant role in promoting the company's performance.In the 1990s,China proposed to establish a socialist market economic system and gradually exert the basic role of the market.In the past few decades,China's market economy has also achieved many achievements,and whether political relations still play a significant role in improving corporate performance.There is further research significance.This paper analyzes the impact of political connections on the company's short-term performance and long-term performance by analyzing the panel data of all listed companies in the GEM from 2009 to 2018,and analyzes the different levels of political connections(political relevance depth)and executives.The difference in the proportion of political connections(political relevance width)on company performance.Since the GEM is mostly private companies of various manufacturing and computer communication services,continuously improving product quality and reducing product cost or maintaining a certain technological leading edge is a common problem faced by these companies.Therefore,this paper selects R&D investment as an intermediary variable.Its impact on political connections and corporate performance.The marketization index can basically represent the level of market economy development in a region.Therefore,this paper selects the marketization index as a regulatory variable to study its impact mechanism on corporate performance through political connections.This paper finds that political connections have a certain role in promoting the short-term performance of the company,but the results are not significant.Because of the significant negative correlation between political connections and R&D investment,R&D investment has a significant negative correlation with the company's short-term performance.Performance has a significant improvement effect.Companies with political connections have a positive effect on the short-term performance of the company due to the reduction of R&D expenditure,but it has seriously affected the long-term development of the company,thus damaging the companys long-term performance.Companies with backgrounds associated with local governments(provincial,city,and county levels)tend to use political backgrounds to have a more pronounced impact on company performance than companies with central-level political connections.This conclusion also confirms the adjustment effect of the marketization index on the company's performance.Because of the low level of marketization,the political connection plays a greater role in the performance of the company.This paper finds that the marketization index has political relevance and short-term performance of the company.The relationship has a significant negative adjustment effect,while the marketization index does not significantly regulate the political relationship and the company's long-term performance.