The Impact of Political Connection and Information Asymmetry on Investment Efficiency: Evidence from China

Yu, Hui-Fun; Lin, Tsui-Jung; Chang, Hai-Yen; Wang, Yu-Huai

doi:10.3390/su12145607

Cited by 13 publications

(19 citation statements)

References 59 publications

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“…The economic consequences of political connections are determined not only by motivation, but also by input costs. The so-called motive decision means that SOEs are subject to policy favoritism due to government intervention and may achieve more social goals [27,28], while private enterprises use political connections to win government attention, such as financing concessions [29][30][31][32][33][34], tax concessions [35], and government subsidies [36,37]. The so-called "cost-affected" refers to the private enterprise's investment in political connections under resource-constrained conditions, which will result in insufficient investment in core capacity building, and have a long-run negative impact on the organization, incentive mechanism and cultural construction of the enterprise [15].…”

Section: Institutional Background Theoretical Analysis and Hypothesismentioning

confidence: 99%

Political Connections, Ownership and Within-Firm Pay Gap

Fang

Duan

2022

Sustainability

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The difference in wages between executives and employees reflects the class conflict in corporate governance. To investigate the political factors within the practice of corporate governance related to employees, this paper empirically tests the relationship among political connections, ownership and within-firm pay gaps. We take the A-share listed companies on the Shanghai and Shenzhen Stock Exchange as the example, design hypothesis tests and examine the effects of political connections on the pay gap in two distinctive groups of companies, the state-owned enterprises (SOEs) and the non-stated-owned enterprises (non-SOEs). The overall result indicates that political connections increase the average salary of executives and decrease the average salary of employees, thereby expanding the within-firm pay gap. Pay gaps in companies with political connections are 16% higher than companies without political connections. The further test results of distinguishing property rights show that in non-SOEs, political connections increase the executives’ compensation and decrease the average compensation of employees, resulting in an increase of the within-firm pay gap. Similar relationships appear in SOEs but without statistical significance. These findings expand the research on income distribution effects of political connections theoretically, and provide useful insights for SOEs’ reform and income distribution system reform in practice.

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Section: Institutional Background Theoretical Analysis and Hypothesismentioning

confidence: 99%

Political Connections, Ownership and Within-Firm Pay Gap

Fang

Duan

2022

Sustainability

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“…The results show; that business strategy plays an important role in shaping investment behavior and efficiency. Yu et al (2020) found that political relevance and information asymmetry affect corporate investment efficiency. Shin et al (2020), showed that there is a positive relationship between women managers and investment efficiency.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The ratio of total liabilities to total assets at the end of the fiscal year is used to calculate financial leverage (Yu et al, 2020).…”

Section: Financial Leverage ( )mentioning

confidence: 99%

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Investigating the Relationship between Information Asymmetry and Political Communication with Investment Efficiency in Tehran Stock Exchange

koushkaki

Bahremandjouy

2022

IJFIFSA

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The primary purpose of this study is to investigate the relationship between Political Communication and Information Asymmetry with the efficiency of investment in companies listed on the Tehran Stock Exchange. To achieve the above goal, two hypotheses were formulated. To test research hypotheses, a sample consisting of 109 companies listed on the Tehran Stock Exchange in the period 2014 to 2019 was selected. And a panel regression model based on composite data was used which has independent and dependent variables. The results of this study show that Political Communication has a negative and significant impact on Investment Efficiency, In contrast, Information Asymmetry has a positive and significant impact on Investment Efficiency, and 117 Investigating the Relationship between Information Asymmetry…this means that with increasing information asymmetry, investment efficiency increases. Therefore, political communications prefer corporate resources to pursue profitable investment options, thus altering corporate investment behaviors and reducing corporate investment efficiency. The results also show that Information asymmetry prevents investors from commenting on investment opportunities, thus allowing local managers to take advantage of profitable investment options.

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“…For individual investors in China, there are various ways to acquire market information, including internet search engine(s), institutional databases, professional websites, exhibitions, other investors either personally known or online, market exploration, conferences, and forums. Actual market information is raw data that financial services companies typically gather, process, and sell, or provide it to their clientele [40].…”

Section: Market Information Acquisitionmentioning

confidence: 99%

Investor Activity in Chinese Financial Institutions: A Precursor to Economic Sustainability

Marjerison

Chae

2021

Sustainability

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One requirement for sustainable economic development is established, trusted, and utilized financial institutions to facilitate investment. The rapid development of financial markets in China, combined with the recency and magnitude of middle-class wealth, has resulted in a rapidly changing investment landscape, as well as changes in people’s investing activities. The extent to which economic growth is sustainable will depend, at least in part, on how financial institutions are perceived, as well as the extent to which they are utilized. The objective of this study was to examine the investment behaviors of individual investors as a way to ascertain the perceived level of trust and stability in the relatively recently developed financial institutions. The influence of market information acquisition on asset allocation and value investment in China was analyzed. This study used secondary data from a China securities corporation from previous research. The analyses utilized the general decision-making style test to assess respondents’ decision-making models and quantitative research methodology culminating in the use of correlation analysis. The results indicated that the acquisition of market information had a positive correlation with the number of assets and investment portfolios. Practical implications and suggestions for future research are provided. The results may be of interest to individual and institutional investors in China, as well as those with an interest in current trends in market information acquisition, asset allocation, and value investment in China.

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The Impact of Political Connection and Information Asymmetry on Investment Efficiency: Evidence from China

Cited by 13 publications

References 59 publications

Political Connections, Ownership and Within-Firm Pay Gap

Political Connections, Ownership and Within-Firm Pay Gap

Investigating the Relationship between Information Asymmetry and Political Communication with Investment Efficiency in Tehran Stock Exchange

Investor Activity in Chinese Financial Institutions: A Precursor to Economic Sustainability

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