Research On Impact Of Political Connections On Firm Value From The Listed Companies Of China

As an important economic behavior, political connection is related to survival and development of the enterprises. It will bring the tremendous influence to the enterprise value. However, at present, the listing corporation enterprise value considerations to financial factors as the basis of judgment, the political connection was less considered. In view of this, this paper researched the relation between political connections and firm value, and theoretical analysis of political connections affect the firm value. This research reveal the political connections affect the enterprise value, the related study will rich the theory of political connections and the value of the enterprise, and guide the investors investment practice more effectively. The main contents contain:The study analyses the influence between the political connection and firm value on the listing corporation of china. This research based on the resource theory, the principal-agent theory, the asymmetric information theory, the rent-seeking theory and the life-cycle theory as the basis, it using literature analysis and normative analysis, analysis the influence of political connection on enterprise value. The political background of senior executives as an alternative variable, and ultimately determine the process from the motivation and conduction of listing corporation political relationship, the empirical research from the three angles of the external respectively to different industries, different ownership, different life cycle stage, as the theoretical basis of this thesis.The study research on the influence between the political connection and firm value base on internal mechanism, it reveals the promotion drivers of enterprise value. The internal interaction way of political connections Based on the principal-agent theory, it found that political connections enhance to the achievement motivation of obtaining economic benefits, seeking to rights, interests. It found that the listing companies are more likely to choose employment form of political connection in the choice of political connections. Multiple regression analysis also confirmed the interaction between the strength of political connections, the depth of political connections and the growth degree of political connections.The study reveals the influence of political connections on firm value under different industries. It found that an industry who has strong comprehensive degree of political connection, it will has a positive impact on firm value, and if one industry keeps a low Debtel of the comprehensive degree of political connections, it will has a negative impact on firm value. Natural monopoly industry political relation intensity has a positive impact on the enterprise value, while the effect of competition is full of industry the strength of political connections to the firm value has negative effect. The industry of local protectionism has greater depth political connection influence on firm value. The industry that has the rapid growth Debtel of political connection, the enterprise value has not been improved.The study reveals the influence of political connections on firm value under different ownership. The results show that, the influence of political connection on the listing corporation of enterprise value, whether in the state owned enterprise or non state-owned enterprise generally has a positive impact on the enterprise value,the comprehensive degree of political connection, non state owned listing Corporation is slightly larger than the state-owned enterprises.The study reveals the influence of political connections on firm value under different stages of the life cycle of listing Corporation. The research indicated grow stage and mature stage, political connection capacity indexes have significant negative impact on enterprise value,played the "grabbing hand" role; and in start-up and a recession stage,political connection capacity indexes have significant positive impact on enterprise value, played the role of "the hand of support". The sub index of political connection ability index also has direct influence on different degree or indirect impact on enterprise value.Domestic and foreign scholars in the study of relationship between political ties and enterprise value are based on single view.However, based on the comprehensive analysis of political connection indicator from the theoretical perspective, it will provide theoretical basis for further study of this study can into a political connections and firm value; it will enrich and improve the theoretical connotation of political connections, enrich the theory of enterprise value, reveal the political connections to enterprise value influence mechanism and effect. From a practical point of view, this study is helpful to improve the management of economic behavior of listing Corporation, the disclosure related information of political connections, enhance the market value of the company; help investors pay attention to political connections and to judge the value of the enterprise, make the scientific investment decision. It also will help the government and intermediary parties clear responsibilities and roles, promote the healthy and stable development of the capital market.