Research On The Impact Of Executive Political Affiliation On Corporate Performance

The phenomenon of corporate political connection is very common around the world.Especially China is in the process of economic transformation,the political connection is very prominent.The influence of executives’ political connections on enterprises has always been the focus of business,academic and political circles.In particular,the influence of political connection on firm performance has attracted extensive attention from domestic and foreign scholars,but the conclusions are not consistent.Since the occurrence of Enron incident,internal control has attracted more and more attention of enterprises.With the release of various policy norms in China,China promulgated the Basic Norms for Internal Control of Enterprises in 2008,issued the Supporting Guidelines for Internal Control in 2010,and in 2011,China required companies listed at home and abroad to carry out internal audit.All these can clearly show that China gradually attaches importance to internal control.Therefore,The relationship between government and enterprise can affect the internal control,the relationship between government and enterprise will become the key condition for the establishment and implementation of internal control,and internal control is the basic guarantee to improve the financial performance of enterprises.Thesis will deeply explore the relationship among executive political connections,effectiveness of internal control and enterprise performance.Firstly,thesis article through to the senior managers of listed companies and political associations,research status quo of internal control effectiveness and business performance review,summarizes the current research content part of the problem,clearly define the research object,research basis.Secondly,based on principal-agent theory,higher-order theory,social capital theory,and resource dependence theory,it is proposed that the political association of senior executives has a positive impact on corporate performance,and its political association helps to improve the effectiveness of internal control.The effectiveness of internal control has a mediating effect in the relationship between the political association of senior managers and corporate performance.Thirdly,the data samples in thesis are selected from Chinese A-share listed companies,and A multiple regression model is constructed through variable design.Descriptive statistics,correlation analysis,multiple regression analysis and other empirical research methods are used to verify the above hypotheses,and the reliability of the empirical conclusion is tested.Finally,based on the empirical result analysis,two main dimensions from enterprise and government put forward the corresponding countermeasures and suggestions.The research results show that political association executive has significant positive relationship with corporate performance,executives of listed companies has a political association or political level,the higher the associated enterprise performance is better.There is a significant positive relationship between the political association of senior executives and the effectiveness of internal control,that is,the political association of senior executives will strengthen the effectiveness of internal control.The effectiveness of internal control plays an important mediating role in the relationship between executive political affiliation and corporate performance.This paper provides micro evidence for an in-depth understanding of the relationship among senior executives’ political connections,internal control effectiveness and corporate performance,and also provides reference for corporate executives to pay attention to political connections,improve corporate internal control and improve corporate performance.