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Do political connections improve corporate performance? Evidence from Chinese listed companies

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  • Li, Xiaoying
  • Jin, Yue

Abstract

By analyzing the data of private listed companies from 2007 to 2013, this article explores the relationship between political connections and enterprise performance. The study finds that listed companies with local political connections have better performance than those without such ties. Regionally, political connections in eastern and central China can effectively promote corporate performance, while political connections in the western region cannot effectively improve and may even inhibit corporate performance. Political connections from managerial personnels other than CEO can also affect firm performance. This article provides empirical evidence from Chinese listed companies for the relationship between political connections, corporate performance and regional characteristics.

Suggested Citation

  • Li, Xiaoying & Jin, Yue, 2021. "Do political connections improve corporate performance? Evidence from Chinese listed companies," Finance Research Letters, Elsevier, vol. 41(C).
    • Handle: RePEc:eee:finlet:v:41:y:2021:i:c:s1544612320316858
    DOI: 10.1016/j.frl.2020.101871
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    References listed on IDEAS

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    Citations

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    Cited by:

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    3. Wei Shao & Ziqi Chen & Huaiyu Liu, 2022. "How do political connections affect the formation of zombie firms? Evidence from Chinese manufacturing listed enterprises," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 36(2), pages 17-31, November.
    4. Yao, Shouyu & Pan, Yuying & Sensoy, Ahmet & Uddin, Gazi Salah & Cheng, Feiyang, 2021. "Green credit policy and firm performance: What we learn from China," Energy Economics, Elsevier, vol. 101(C).
    5. Rocca, Maurizio La & Fasano, Francesco & Cappa, Francesco & Neha, Neha, 2022. "The relationship between political connections and firm performance: An empirical analysis in Europe," Finance Research Letters, Elsevier, vol. 49(C).
    6. Wang, Zongrun & Fu, Haiqin & Ren, Xiaohang, 2023. "Political connections and corporate carbon emission: New evidence from Chinese industrial firms," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    7. He, Yuhan & Yi, Yang, 2023. "Digitalization of tax administration and corporate performance: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 90(C).
    8. Alam, Ahmed W. & Farjana, Ashupta & Houston, Reza, 2023. "State-level economic policy uncertainty (EPU) and firm financial stability: Is there any political insurance?," Economics Letters, Elsevier, vol. 225(C).
    9. Yuan Qiu & Di Zhou, 2024. "De‐politicization and corporate social responsibility: Empirical evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3668-3684, July.
    10. GuoHua Cao & WenJun Geng & Jing Zhang & Qi Li, 2023. "Social network, financial constraint, and corporate innovation," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(3), pages 667-692, September.

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