Helping hands or grabbing hands? An analysis of political connections and firm value |
| |
| Institution: | 1. Department of Economics and Finance, University of Dayton, 300 College Park, Dayton, OH 45469, United States;2. Shanghai National Accounting Institute, Shanghai, 201702, China;3. Department of Finance, Lingnan College, Sun Yat-Sen University, Guangzhou, 510275, China;1. Department of Economics and Finance, University of Dayton, 300 College Park, Dayton, OH 45469, United States;2. Shanghai National Accounting Institute, Shanghai, 201702, China;3. Department of Finance, Lingnan College, Sun Yat-Sen University, Guangzhou, 510275, China;1. School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong;2. Lee Shau Kee School of Business and Administration, Open University of Hong Kong, Hong Kong;1. Nanjing University, School of Business, Nanjing, China;2. City University of Hong Kong, Accounting Department, Hong Kong, China;3. Chinese University of Hong Kong, School of Accountancy, Hong Kong, China;4. Zhejiang University of Finance & Economics, School of Accountancy, Hangzhou, Shanghai University of Finance & Economics, School of Accountancy, Xueyuan Street No.18, Xiasha Higher Education Park, Hangzhou 310018, Shanghai, China;1. Huazhong University of Science and Technology, China;2. Deakin University, Australia |
| |
| Abstract: | We construct a unique political connection index to capture variations in the strength of firm political relations in China. The index incorporates various channels through which a firm's executives, chairperson, directors, and other senior officers are politically connected with government officials and bureaucrats. Overall, there is a negative relation between our index and firm value for the full sample, but such negative relation mainly exists for state-owned enterprises (SOEs) and it becomes positive for non-SOEs. Furthermore, close examination shows an inverted U-shaped relation between political connections and firm value for the full sample in general and for non-SOEs in particular: Firm value increases initially at a lower level of connections and then begins to decrease at a higher level. The findings are consistent with the different business objectives and motivations of SOEs and non-SOEs in seeking political connections. Finally, our findings are robust after controlling for potential endogeneity and using an alternative headcount index construction method. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
