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Political connection and corporate innovation: Evidence from China

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  • Zhe Tang

Abstract

This paper studied the correlation between corporate innovation and Chinese private enterprises’ political connection based on a sample from 2008 to 2016 of all listed Chinese private companies. The empirical results showed that political connection contributed to corporate innovation and increased the corporate innovation output. The study further conducted a Difference-in-Difference approach which utilized China’s 2013 anti-corruption campaign as a natural experiment and the results showed that the positive effects between political connection and corporate innovation were weaken among political connected firms after the anti-corruption campaign. At last, the paper explained the channel of above relationship from the prospect of financing constraints and institutional complements. JEL classification numbers: O31, P26, P48Keywords: Political connection, Corporate innovation, Financing constraints

Suggested Citation

  • Zhe Tang, 2020. "Political connection and corporate innovation: Evidence from China," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(3), pages 1-6.
    • Handle: RePEc:spt:apfiba:v:10:y:2020:i:3:f:10_3_6
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    References listed on IDEAS

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    More about this item

    Keywords

    political connection; corporate innovation; financing constraints;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights

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