Study On Corporate Political Connection,Institutional Environment And Corporate Irregularities

At present,China's economy and capital market are developing at a high speed,so it has made great progress and fruitful results.But at the same time,the development of China's economy and capital market also brought some unfavorable factors,among which,the most typical is the illegal behavior.In recent years,relevant data show that violations have been increasing,which makes it necessary to study violations.At the same time,there are also abundant studies on corporate irregularities in the academic circle,but they mainly focus on the influencing factors of corporate irregularities,including the board structure and institutional environment,while there are few literatures on the influence of political association on corporate irregularities.In addition,in the Chinese market,many enterprises have begun to realize that political affiliation can have a great effect on the operation of enterprises,regardless of whether the impact is fundamentally good or bad,but the reality is that more and more enterprises are trying to establish contact with the government through various channels.At present,as it has become a common phenomenon that enterprises have political connections,and the current situation of institutional development in China is still in the situation that formal system and informal system jointly play a governance role,it is obvious that political connections can play a governance role as an imperfect alternative mechanism of formal system.Therefore,it is of certain theoretical and practical significance to study the influence of corporate political association on corporate irregularities.Based on this,this paper firstly studies the influence of corporate political association on corporate irregularities.At the same time,combined with the current actual situation of China,that is,China is a country with a large territory and abundant resources,and the economic development of each region is in a relatively unbalanced state,the paper further analyzes the influence of the political association of enterprises on the illegal behaviors of companies under different institutional environments.Next,this paper discusses whether the political association of state-owned enterprises and private enterprises have different influences on the illegal behaviors.At the same time,we also studied whether different types of political connections had the same effect on corporate irregularities.This paper,by studying the relationship between corporate political association and corporate irregularities,enriches the research on the influencing factors of corporate irregularities from a deeper level and expands the research scope of corporate irregularities.In addition,from the perspective of investors,the research results of this paper are conducive to rational analysis of investment behavior,making the development of the capital market more fair and orderly,which further promotes the establishment and development of China's capital market.Furthermore,the study on the influence of corporate political association on corporate irregularities can help many scholars to understand more scientifically the relationship between government and enterprise in China.The research sample of this paper is all a-share listed companies from 2010 to 2017.In this paper,the political association of enterprises is measured by "whether the company is politically related and the proportion of the political association",and the illegal behavior of the company is measured by "whether the company violates the rules,the frequency of the violation and the severity of the violation",and the relationship between the political association of enterprises and the illegal behavior of the company is studied by adding the institutional environment variables.This paper finds that the political association of enterprises will restrain the illegal behavior of companies.Specifically,there is a significant negative correlation between whether an enterprise is politically connected and whether the company violates the law,and it can significantly reduce the frequency of the violation and the intensity of the violation.The proportion of enterprises' political affiliation is negatively correlated with whether the company violates the rules.The higher the proportion of political affiliation is,the lower the frequency of the company's violation and the lower the severity of the violation.After further grouping the institutional environment,it is found that in regions with a good institutional environment,the inhibition effect is more significant.Specifically,in regions with a higher degree of marketization,the inhibition effect of corporate political association on corporate irregularities is stronger.In the regions with low government intervention,the inhibition effect of corporate political association on corporate irregularities is stronger.And where the legal system is better,corporate political affiliation has a stronger deterrent effect on corporate irregularities.This paper further differentiated nature of the enterprise after found that relative to state-owned enterprises,non-state-owned enterprises associated with political irregularities inhibitory effect on the company stronger,embodied in: a political association of non-state enterprises violations of probability is low,at the same time violations frequency is low,and the intensity of the irregularities are small relative to state-owned enterprises.After distinguishing the institutional environment,it is found that when non-state-owned enterprises have political connections,and in regions with better institutional environment,they have a stronger inhibitory effect on the illegal behaviors of enterprises.However,in state-owned enterprises,no matter what the institutional environment is,the political connections have little impact on the illegal behaviors of enterprises.Also distinguish between enterprises on the nature of political association found that after characteristics to senior political relevance of enterprise will promote the occurrence of irregularities,directors and independent directors political relevance and quality enterprises will inhibit the occurrence of irregularities,embodied in: executive politics can increase the probability of illegal companies affiliated enterprise,increase the frequency of illegal company,and will make the company irregularities foe;The political association between directors and independent directors will reduce the probability and frequency of corporate violations and the intensity of corporate violations.Further distinguish the institutional environment,found that for characteristics to senior political relevance of enterprise,less in the institutional environment of region,political association irregularities promoting effect on the company stronger,for directors and independent directors political relevance enterprise,in the institutional environment better,political association irregularities stronger inhibitory effect on the company.