Political connections, financing and firm performance: Evidence from Chinese private firms

Li, Hongbin; Meng, Lingsheng; Wang, Qian; Zhou, Lian

doi:10.1016/j.jdeveco.2007.03.001

Cited by 1,444 publications

(1,092 citation statements)

References 44 publications

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“…Two dependent variables are used to 9 This dataset has been used by others, e.g., Bai, Lu, and Tao (2006) in a study of private enterprises' access to bank loans; Li, Meng, Wang, and Zhou (2008) in a study of entrepreneurial party membership and enterprise performance; and Du, Lu, and Tao (2008) in a study examining the impact of property rights protection on enterprise diversification. study enterprise performance: Labor Productivity (the logarithm of output divided by total employment) and Profitability (profits divided by total fixed assets).…”

Section: Data and Variablesmentioning

confidence: 99%

Union effects on performance and employment relations: Evidence from China

Lu¹,

Tao²,

Wang³

2010

China Economic Review

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Abstract:This paper empirically studies union effects on the performance of, and employment relations in, China's private enterprises. The study finds a positive and statistically significant union effect on labor productivity, but not on profitability. It further finds that unions lead to better employee benefits and increased contract signing in employment. These findings suggest that, in the era of transition from a centrally planned to a market economy, unions in China's private enterprises do promote workers' interests as unions do in other economies. And they do that without abandoning their traditional role of harmonizing employment relations, as required by the Party.

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Section: Data and Variablesmentioning

confidence: 99%

Union effects on performance and employment relations: Evidence from China

Lu¹,

Tao²,

Wang³

2010

China Economic Review

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“…Another distinct feature of the Chinese capital market, which differs from other emerging markets, is the continuing rule of the Communist Party and ongoing ideological discrimination against entrepreneurial ownership, despite a substantial reform of the economy (Li et al, 2006;Li et al, 2008). Previous literature suggests that Chinese entrepreneurial firms are discriminated against for accessing bank loans (Cull and Xu, 2003;Li et al, 2009;Firth et al, 2009).…”

Section: Introductionmentioning

confidence: 99%

Does political capital create value in the IPO market? Evidence from China

Liu

Tang

Tian

2013

Journal of Corporate Finance

169

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This study examines the value of political capital in the Chinese IPO market. We find a positive relationship between a politically connected executive and the probability of IPO approval of entrepreneurial firms. We further identify that shareholders value those connections and give a market premium to connected firms after the firms go public. We provide evidence that other types of political capital gained through external sources, such as politically connected sponsors and PE investors, also bring benefits to the firms in their IPO approval, and these connections substitute for the effect of the executive's political connections on IPO approval. We argue that in emerging markets where government intervention is still prevalent, political capital does create value and entrepreneurial firms usually build political capital to facilitate their access to the IPO market, although other types of political capital do not bring further benefits into the post-IPO market. ABSTRACTThis study examines the value of political capital in the Chinese IPO market. We find a positive relationship between a politically connected executive and the probability of IPO approval of entrepreneurial firms. We further identify that shareholders value those connections and give a market premium to connected firms after the firms go public. We provide evidence that other types of political capital gained through external sources, such as politically connected sponsors and PE investors, also bring benefits to the firms in their IPO approval, and these connections substitute for the effect of the executive's political connections on IPO approval. We argue that in emerging markets where government intervention is still prevalent, political capital does create value and entrepreneurial firms usually build political capital to facilitate their access to the IPO market, although other types of political capital do not bring further benefits into the post-IPO market.

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“…Several measures that have been introduced in the literature such as politically connected CEO or boards (Agrawal & Knoeber, 2001), government bureaucrats or former bureaucrats on the board (Fan et al, 2007), closeness with president evidenced by sharply decrease in stock price when the president was getting sick (Fisman, 2001;Leuz & Oberholzer-Gee, 2006), non-market activities for example lobbying and campaign contribution (Keillor & Hult, 2004;Claessens et al 2008) and ownership by politicians (Li et al, 2008) The issue of measuring firm political connections has not been a central discussion in most 81 reviewed papers. those papers adopt the measures that have been employed in the previous studies.…”

Section: Measuring Corporate Political Connectionsmentioning

confidence: 99%

A Recent Literature Review on Corporate Political Connections

Trinugroho

2017

JDM

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It has always been an interesting issue deliberating the connectedness between corporation and political power. There have been a substantial number of papers in the academic literature empirically studying what so call "corporate political connections" over the last 17 years. Using 81 papers published in 2010-2017 in finance, economics, accounting, management and other journals, in this present paper, I provide a recent literature review on firm political connections particularly with respect to the empirical studies discussing the impact of being politically connected firms. A number of issues related to the effect of political connections on corporate strategy, behaviors and outcomes have been addressed. Few other papers provide different perspective by looking at the antecedents of corporate political connections and the contingency role of such connections. Little is found on the development of new measures of corporate political connections. Finally, it could be suggested that the interaction between political connections and the technological-based business innovation would be an interesting issue to study.

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Political connections, financing and firm performance: Evidence from Chinese private firms

Cited by 1,444 publications

References 44 publications

Union effects on performance and employment relations: Evidence from China

Union effects on performance and employment relations: Evidence from China

Does political capital create value in the IPO market? Evidence from China

A Recent Literature Review on Corporate Political Connections

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