Political Relationship, Audit Opoinions, And The Contract Of Bank Loan

With the background of Chinese special system economic transformation period, political relationship of private company derives from the poor protection of property right. In order to change the unfavorable conditions, the owners of private enterprises are inclined to take part in the political life, such us voting for the NPC representatives or CPPCC Committee members. On the other way, they preferred to employ the individuals who have worked in the government to be in charge of the company. Through these ways, the private companies wish to build good relationship with government. The political relationship is one informal mechanism, which can be the substitute of state-owned property to help them acquire the scarce resource or decrease the unfavorable influence factors.Our article uses the listed companies samples between2004and2009to carry out the empirical demonstration that, whether political relationship decreases the bad influence of unclean audit opinion on bank loan. This article divides the samples into two groups. The first group is the private companies, including the companies having political relationships and without. Another group is the state-owned companies and the private companies with political background. The writer comes to several conclusions, first, the audit opinions have information content, and the companies with unclean opinions will be given less bank loan. Second, the facilities of audit opinions have been weakened on the aspect of political relationship. We also discover that the political relationship on different ownership have little difference on the short bank loan which also means that private companies’political relationship help them achieve nearly the same advantage as state-owned companies. Third, the bank loan effect caused by political relationship is on the short term other than the long term bank loan. Last but not the least, with the advancement of marketing process and the soundness of rules of law, the credit effect of political relationship is decreased. So, the article draws the conclusion that, political relationship is one substitute mechanism which origins from the low marketing process and poor law protection and devoted to reduce risk and make good development. This thesis provides one theoretical basis for the realities that private companies are pursuing for the political status and build relationship with government.