Political Connection Of Management And Corporate Governance

In transition economies, it is a common phenomenon that private enterprises established political connection. Studies have shown that political connection could influence the value of companies by kinds of methods. But whether political connection influence the efficiency of corporate governance has not confirmed.This paper is conducted on a sample of the A-share listed private companies in Shanghai and Shenzhen security market over 2005-2009 periods and empirical analysis how the government background of top managers in private enterprise affect their replacement policy. As an important governance mechanism of company, I choose the top managers'turnover as research angel. This paper use kinds of research methods which including descriptive statistics, single variable analysis and multivariable regression analysis. I found that the government background of top managers significantly reduces the possibility of its being replaced. The chairman of the government background significantly reduces the performance sensitivity of chairman turnover. This result show that the government background of top managers reduce the efficiency of corporate governance. The study also found that the difference of institution environment in variable regions has no significant relationship with the efficiency of corporate governance.This paper research how the government background of top manager influence the efficiency of corporate governance of listed companies from the perspective of turnover of top managers and empirical prove that the government background of top managers is one of the factors that can influence the efficiency of corporate governance. This paper enriches the research literature of economic consequence of political connection and top managements' turnover.