The Research Of Political Connections And Investment Performance In The State-owned Enterprises

China has a cultural background which different from the western developed countries. In the Western countries, politics depends on economics, but in such a relational society, it’s the government policy that majorly influence the trend of our country’s economy, to study China’s economy, or to understand Chinese business organizations, social capital which is based on the sociological meaning should be considered, especially the political capital. Therefore, this paper is based on the special circumstances of our own country, and regards the political relations between the state-owned enterprises and the government (executives, government background) as the logical starting point. In the view of Property Rights as a Relational Concept, the political relationship and Chinese state-owned enterprise investment are studied under our unique system background, the fiscal decentralization system reform and state-owned enterprise reform.Based on our Shenzhen stock market 2004-2009 non-financial category of state-owned a-share listed companies as object of study, the investment efficiency is measured by the sensitivity of investment spending and investment opportunity in enterprise, and to examine political relations’effects. Results show that in 2007-2009, in companies which have political relations the investment spending and investment opportunities are more sensitive, in another word, political relations can promote the enterprise’s investment efficiency in 2004 to 2006, But in 2004-2006, things are contrary to the above.This paper argues that we should hold a dialectical view of this problem in different economic backgrounds. Under the unexpected circumstance, political relations between the state-owned enterprises can improve investment efficiency and achieve a soft landing, allowing the economy to the normal track; oppositely, government intervention distorts the investment behavior of enterprises. Therefore, the Government should establish the concept of a timely transition, to figure out how to convert between the two types of expectations, is the key of understanding the crisis and responding effectively to the crisis. Once the crisis is over, with a normal expectation, government functions should return to normal times. To improve investment efficiency of state-owned enterprises, thereby enhancing the corporate value, the government should facilitate the reform of the selection of professional managers in the state-owned enterprises, so that promote the formation of state-owned enterprise managers’buyer’s market, thus promoting the birth of a seller’s market of managers, and in this way we an further reduce government intervention in business, so that achieve the actual realization of the "separation".