The value of political connections in opaque firms: Evidence from China's file 18

Hu, Yi; Wang, Chang‐Yun; Xiao, Gang; Zeng, Jianyu

doi:10.1016/j.pacfin.2019.05.001

Cited by 13 publications

(10 citation statements)

References 42 publications

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“…Document No. 18 also prohibits government officials from exercising their political influence to create preferential business advantages for companies [9]. This paper defines the year 2013 as the anti-corruption year and test the hypotheses based on statistical differences of the two subgroups of the sample, one for 2008-2012 and the other for 2014-2018.…”

Section: Sample Selection and Methodologymentioning

confidence: 99%

“…In reference to Hu et al [9], this paper added control variables such as Age (firm age), Size (firm size), Sales Growth (annual growth of revenues), Board Size (number of directors on the board), IndBoard Ratio (board independence), ROA (return on assets), Booklev (leverage), Cash Flow (cashflows), Tangibility (tangible assets).…”

Section: Sample Selection and Methodologymentioning

confidence: 99%

“…In brief, this paper serves as an additional contribution to the literature on the relation between anti-corruptions and ownership structures. Hu et al find that the value of politically connected independent directors declines dramatically after anti-corruption campaigns [9]. This indicates that the implementation of anti-corruption clauses can effectively eliminate board members' political connections and mitigate the damage of political connections on company performances.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

The Relationship Among Anti-Corruption Campaigns, Political Connections, and Information Asymmetry on Firm Performance

Tsai¹,

Lin²,

Liang³

et al. 2021

Proceedings of the 3rd Annual International Conference on Public and Business Administration (AICoBPA 2020)

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This article discusses the impact of anti-corruption campaigns, political connections and information asymmetry on firm performance, and Shanghai and Shenzhen listed companies in mainland China are used as a sample from 2008 to 2018. This study finds that there is a negative relation between political connections and firm performance. Further, this article adds the discussion of anti-corruption clauses. The sample group with high information asymmetry has a positive performance. The research results of this paper contribute to corporate governance and management practices in emerging markets, that is, when managers are embedded in the interests of political relations due to imperfect markets, the potential costs and benefits of political connections need to be considered and taken into account.

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Section: Sample Selection and Methodologymentioning

confidence: 99%

Section: Sample Selection and Methodologymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

The Relationship Among Anti-Corruption Campaigns, Political Connections, and Information Asymmetry on Firm Performance

Tsai¹,

Lin²,

Liang³

et al. 2021

Proceedings of the 3rd Annual International Conference on Public and Business Administration (AICoBPA 2020)

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“…According to Li et al (2008) and Chen et al (2011), a Chinese firm is considered politically connected when its chairman or general manager is or used to be a government official, has close ties to a current or former government official, or is (used to be) the member of National People's Congress, Chinese People's Political Consultative Conference, or the Party Congress. Considering the political system of China, which is classified into different ranks from top to bottom, we constructed an index to evaluate the strength of political connections in China for a more accurate description (Chen et al, 2017;Hu et al, 2019;Peng et al, 2017;Yu et al, 2019). The IPC index of 4-0 was assigned for firms according to the ranks of chairman's or CEO's political connection: "4" for national rank, "3" for provincial rank, "2" for municipal rank, "1" for the county-level rank, and "0" for situations without political connection.…”

Section: Control Variablesmentioning

confidence: 99%

The organizational relationship–based political connection and debt financing: Evidence from Chinese private firms

Zhang

Liang

et al. 2021

Bulletin of Econ Res

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Given the existing literatures of political connection's effect on debt financing that mainly focus on the interpersonal relationship-based political connection, this study investigated how organizational relationshipbased political connection (OPC, established by corporate party organization) influence private firms' debt financing in China. With 11,061 firm-year observations of China's A-shared listed private firms between 2010 and 2017, we found that OPC has a significantly positive effect on private firms' debt financing. Moreover, this effect is weakened in regions with better developed institutional environments, whereas strengthened when the firms are supported by the industrial policy. This study advances our understanding of the connotation of political connections and provides a new perspective for investigating determinants of private firms' debt financing in the context of an emerging economy.

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“…Chen et al (2017) developed the PC Index based on the sum of four components: the chief executive officer (CEO)’s PC, the chairperson’s PC, the director’s PC and the other senior officer’s PC. This PC Index was also used by Hu et al (2019). Other studies used the percentage of board members with PC (Hu et al , 2019; Joni et al , 2020; Shi et al , 2018).…”

Section: Theoretical Review and Hypotheses Developmentmentioning

confidence: 99%

Are political connections beneficial or harmful toward firms’ performance? A meta-analysis approach

Prasetyo

Nasution

2021

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Purpose This study aims to reconcile conflicting empirical results from prior studies on the association between political connections (PCs) and firms’ performance. Furthermore, it investigates whether the contradictory findings were moderated by the different types of both PCs and firms’ performance measures. This study also makes a cross-country comparison of the empirical evidence to provide more insight. Design/methodology/approach This study used meta-analysis to integrate the previous studies’ findings on the association between PCs and firms’ performance and further investigated the moderators of such association. Findings The findings show that PCs have a positive association with firms’ performance. This result is apparent for both democratic and authoritarian countries, which suggests PCs’ beneficial consequences toward firms’ performance should not be disregarded in both contexts. This study also finds PCs and firms’ performance measures moderate the association between PCs and firms’ performance. Originality/value This study contributes to the stream of research that investigates the association between PCs and firms’ performance. To the best of my knowledge, it is among the first to implement statistical meta-analysis on the aforementioned literature while incorporating a cross-country comparison.

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The value of political connections in opaque firms: Evidence from China's file 18

Cited by 13 publications

References 42 publications

The Relationship Among Anti-Corruption Campaigns, Political Connections, and Information Asymmetry on Firm Performance

The Relationship Among Anti-Corruption Campaigns, Political Connections, and Information Asymmetry on Firm Performance

The organizational relationship–based political connection and debt financing: Evidence from Chinese private firms

Are political connections beneficial or harmful toward firms’ performance? A meta-analysis approach

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