Empirical Study On The Influence Of Private Companies' Political Relationship On Bank Loans And Corporate Value

The private enterprise in China because of its small scale, the management time short, the loan risk higher reason suffers the bank to its loan discrimination. If the director of board of a company and the government establish the good political relation to a certain extent to be possible to exempt this kind of discrimination, making it easier to get bank loans, simultaneously this kind of relations can have certain influence to the company value.In this paper, we have empirical analyzed the relationship between political relationship and bank loans and company value. Taking as our specimens personal control of private listed companies during 2006 to 2009 in Shanghai Stock Exchange or in Shenzhen Stock Exchange. And according to whether the executives of a company is a former or incumbent government official, or in bank department assignment or a member of the People 's Congress or a member of the Chinese People's Political Consultative Conference, we have judged whether this company has a political relationship. The company executives political relationship we use virtual variable to say, if has the political relation PC value is 1, otherwise is 0. In order to overcome the simple mixed data cross-section regression model of samples from the inherent problems related to the panel data model and the balance of sampling bias, this paper made the empirical research on unbalance when using panel data analysis method. We found that executives have political relations of private enterprise of company relatively little relationship easier access to bank loans, and we found that after introducing political relations, reflects the private enterprise accounting information to reduce in the solvency of the usefulness of credit decisions. And whether we adopt Tobin Q or ROE to measure the value of company, the results of the research were confirmed in private listed companies and the background of the government with negative correlation between the relationship, but are statistically unsignificant. The company hope to establish relationship between the government can avoid some political risks in the competition has certain advantages. Because of this kind of intense desire may cause they have good pay cost, no consideration for the public interest and the government may sacrifice company values.