This paper purposes to examine the relationship between political connection and market valuation in China's individual-controlled listed company .Using 1230 samples of"A share"individual-controlled listed firms during 2005-2008 in Shanghai and Shenzhen Stock Exchange Markets. Collecting the ultimate controller's political connection background information of those individual-controlled listed companies by hand ,we portrayed their political relationships. The empirical results show that there is no significant relationship between political connection and market valuation. in China's individual-controlled listed company as a whole. Moreover , results also show that for the individual-controlled listed companies whose cash flow rights and control rights is not deviated , political connection has a significant positive effect on market valuation ; and for the individual-controlled listed companies whose cash flow rights and control rights is deviated, and without a controlling shareholder , political connection also has a significant positive effect on market valuation , however for the individual-controlled listed companies whose cash flow rights and control rights is deviated, and there is a controlling shareholder existed , political connection has no significant effects on market valuation. All in all , political connection can create value,but sometimes the value is reflected as firm value , however in other times the value is reflected as the ultimate controller's personal value. |