Political connections, financing and firm performance: Evidence from Chinese private firms |
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| Authors: | Hongbin Li Lingsheng Meng Qian Wang Li-An Zhou |
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| Institution: | 1. Department of Economics, The Chinese University of Hong Kong, Shatin, N.T., Hong Kong, PR China;2. School of Economics and Management, Tsinghua University, Beijing 100084, PR China;3. Department of Economics, University of Maryland, College Park, MD 20742, USA;4. School of Accountancy, The Chinese University of Hong Kong, Shatin, N.T., Hong Kong;5. Guanghua School of Management, Peking University, Center for Research in Private Enterprise at Zhejiang University, PR China |
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| Abstract: | This paper examines the role of affiliation with the ruling Communist Party in the operation of private enterprises in China. Using a nationwide survey of private firms, we find that the Party membership of private entrepreneurs has a positive effect on the performance of their firms when human capital and other relevant variables are controlled. We further find that Party membership helps private entrepreneurs to obtain loans from banks or other state institutions, and affords them more confidence in the legal system. Finally, we find Party membership to be more important to firm performance in regions with weaker market institutions and weaker legal protection. |
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| Keywords: | Political connections Financing Firm performance China |
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