The value of political ties for firms experiencing enforcement actions: Evidence from China

Abstract

We study the value of political ties for firms experiencing enforcement actions. We find that stronger corporate political ties alleviate the negative market shocks caused by enforcement action announcements of listed firms in China, and the relationship between political ties and market reaction is more pronounced for enforcement actions that signal loss of market credibility than for enforcement actions that signal loss of political ties and in regions with greater government intervention. We further find that firms with stronger political ties experience larger increases in long-term debt after enforcement actions, suggesting that it is the investors' expectation of government support to connected firms that mitigates the negative market reaction.

Operational Risks and Firm Market Performance: Evidence from China*

“…The mean (median) fine amounts in our sample is CNY 11.02 million (CNY 0.35 million), indicating a large skewness toward a greater number of small fines. In addition, given the historical lack of law enforcement in China, many events are likely not reported or are mitigated due to political ties (Yu & Zheng, 2019).…”

Political Connection dalam Kajian Filsafat Ilmu

“…Qian et al, 2015), penilaian pasar (Boubakri et al, 2012;He et al, 2014), kinerja perusahaan (Y. Wang et al, 2019), Initial public offering (Ferris et al, 2016;Francis et al, 2009), nilai-nilai perusahaan, khususnya, aktivitas keuangan perusahaan, pilihan dan pengungkapan, misalnya (Chaney et al, 2011;He et al, 2014;Yu & Zheng, 2019), pilihan auditor dan kualitas audit (Guedhami et al, 2014), lingkungan perusahaan (W. Qian & Chen, 2021;Xu & Yan, 2020).…”