Military Political Connection And Corporate Value

In September 2013,during on the visit to Central Asia and South-South Asian countries,President Xi Jinping proposed a major initiative to jointly build the Silk Road Economic Belt and the 21st Century Maritime Silk Road(Belt and Road),which was highly attracted by many states.However,Thailand is an important starting point for the "One Belt,One Road"cooperation initiative and an important country connecting Central Asia to Africa and Europe.It plays a role as a bridge and link in the construction of the "Belt and Road".With the accelerated construction of the "Belt and Road",China's relations with Thailand have become closer.However,since Thailand's autocratic monarchy was overthrown and the constitutional monarchy was established,Thailand's domestic political situation has been very unstable.There have been at least 20 military coups.However,every political turmoil in Thailand is bound to have a negative impact on Thailand's economy,which is also not advantage to the cooperation between China and Thailand.The "Dame Gate" incident triggered by the military coup in 2014 is a good example.However,the Thai military is very special and very independent.Date back to the history of the Thai military coups,the military has often go to the political stage and this phenomenon has become normal.The reason why the Thai military is so independent is that the military has its own source of income.Companies that are politically connected with the military have benefit when the government is controlled by military.Is it possible to bring economic benefits to the military-related companies?In order to take advantage in the economy cooperation and grasp the opportunities in competition with Thailand,the influence of the Thai military on the value of the company has cannot be ignore.Although domestic and foreign scholars have many literatures about the influence of political connected company on corporate value,most of them focus on the political connected of civilian government,but few on the political connection to the military government,and relatively few on Thailand.It is obvious that Thailand's military coup has become a common phenomenon for Thai people.However,what is the impact of military political connections on the value of Thai listed companies?This study has important practical significance for the country,enterprises and individuals.This paper takes the listed companies in Thailand from 2009 to 2017 as the research object,and uses the event study method,the differences-in-differences model(DID)and the Propensity Score Matching-difFerences-in-differences(PSM-DID)three methods to analyze,and empirically studies the influence of the military coup soldiers taking office in Thailand in 2014 on the value of the military politically connected companies.At first,this paper use event study analysis the impact of military coup on Thailand the stock market,the results show that the military coup in Thailand has a positive effect on stock market,at the same time,Cumulative abnormal return of 15 days before and after the military coup of military political connected companies are 4%higher than non-military political connections.In this paper,tobin's Q value is used to measure the value of the company and is taken as the dependent variable,group dummy variable,event dummy variable and their cross-product term are used as the independent variables,and financial indicators such as the company's debt ratio and logarithm of total assets are taken as the control variables.In this paper,the results of the differences-in-differences study show that when the military coup took place and the military government was established,the value of the companies with military political connections in Thailand was significantly higher than that of the companies with non-military political connections,and the differences-in-differences results were still supported by the robustness test and endogenous test.The result of the propensity score matching differences-in-differences study also showed that after the military government came into power,the value of military political connected companies was significantly higher than that of non-military-related political companies,which was consistent with the results of the differences-in-differences study and more strongly proved the positive impact of military political connections on corporate value.Accordingly,I think,when the the government is controlled by military,the value of the companies with military political connections in Thailand was significantly higher than that of the companies with non-military political connections.Therefore,when China and Thailand have investment cooperation,Our country should respect the phenomenon of military coups in Thailand.when the Thai military is in power,we should find military political connected company to cooperate,in order to seek further cooperation advantage.