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Political connections of independent directors and firm internationalization: An empirical study of Chinese listed firms

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  • Wang, Xia
  • Feng, Mingming
  • Xu, Xiaodong

Abstract

Using Chinese A-share listed sample firms, we find a significantly positive association between independent directors' political connections and firm internationalization. This association is more pronounced in firms in western regions of China compared to that in firms in eastern regions of China. We also find that the Chinese government's recent adoption of anti-corruption practices increases the probability of firm internationalization. However, independent directors' political connection would promote firm internationalization only in firms where the top manager does not has political connections or in non-state-owned firms, indicating that top managers' political connections may play an inhibitory effort on firm internationalization, and there is to some extent a substitution effect between state ownership and independent directors' political connections in promoting firm internationalization.

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  • Wang, Xia & Feng, Mingming & Xu, Xiaodong, 2019. "Political connections of independent directors and firm internationalization: An empirical study of Chinese listed firms," Pacific-Basin Finance Journal, Elsevier, vol. 58(C).
    • Handle: RePEc:eee:pacfin:v:58:y:2019:i:c:s0927538x19301532
    DOI: 10.1016/j.pacfin.2019.101205
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    6. Yike Yu & Danting Cao & Zuogong Wang & Zaijie Zhang, 2021. "Does the fellow‐villager relationship between the independent director and the chairman of the board can inhibit the major shareholder expropriation? Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(6), pages 1374-1393, September.
    7. Ting Ren & Youzhi Xiao & Xinguo Yu & Hongyan Yang & Jianmei Ge, 2020. "Resignation of officials as independent directors and firm performance," Frontiers of Business Research in China, Springer, vol. 14(1), pages 1-21, December.
    8. Pochara Arayakarnkul & Pattanaporn Chatjuthamard & Suntharee Lhaopadchan & Sirimon Treepongkaruna, 2022. "Corporate governance, board connections and remuneration," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 795-808, July.
    9. Lin, Yan & Liu, Yijia & Chan, Kam C., 2021. "Political connections and product market competition: Effects and channels," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 801-816.
    10. Fang Fang & Tingbo Duan & Kun Li, 2022. "Political Connections, Ownership and Within-Firm Pay Gap," Sustainability, MDPI, vol. 14(14), pages 1-20, July.
    11. Wang, Xiaoming & Xu, Tingting, 2022. "Pay of political directors in China," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
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    14. Yi, Shangkun & Wang, Jian & Wang, Xiaoting & Feng, Hongrui, 2022. "CEO political connection and stock sentiment beta: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).

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