The Effects Of Political Connection On Company's Performance In Private Listed Firms

Political connection is a worldwide problem. The way of political connections established in the world is varied, which is decided by the different institutional environment and national background. Grasping the differences caused by these core characteristics of the system, the research results about political connections is credible and convincing.From this perspective, the paper explored and expounded the significant difference between China's institutional environment and other countries, which is the political system with Chinese characteristics and power allocation. The results showed that the government executive power plays a decisive role in many key areas of economic and enterprise development. Meanwhile, People's Congress and Political Consultative Conference play a weaker role on the control of economic affairs. The power structure affects the distribution of economic resources, and ultimately decides the company's performance.Based on this discovery, this paper attempted to answer the following three questions:First, did political connection improve the company's performance? Second, compared to members of PCC or NPC, did government background play a significant role on the company's performance? Third, did market-oriented process affect the relation between government background and company's performance?To ask those questions, we selected 1266 A-Share Listed Companies as a sample, which were used to conduct multiple linear regression analysis. The results showed that political connections promoted private listed companies to improve performance significantly. After distinguishing types of political connections, the government background can bring with higher performance, and this difference is significant. Considering the factor of market-oriented process, the stronger government intervention, the better company's performance.