The Political Background Of Executives And Company Performance

At present our country economy is still in a transition economy, during this period, the obvious feature is a large part of resources is in the hands of our government, the government owns the absolute control over resources. What’s more, the government also indirect banks and other financial institutions GRC behavior, thus influence enterprise behavior.The real estate industry in our country is a very important industry. From2003, China started formally established real estate industry as a pillar industry of the national economy in our country. As we all know, the rapid development of real estate industry is relevant to the resource and capital. So, from the initial government grant to the bank financing developing buildings, the development of real estate enterprise and government have close ties. Therefore, on the analysis of executives’political background and company performance association, the real estate industry is a good study Angle.In recent years, Chinese high house prices have been rushed to the discussion topics. After established real estate as pillar industries in national economy in2003in our country, China’s real estate industry began to appear continuous overheating growth with having a rapid growth of house price. The Chinese government also launched a series of macro-control measures. In2005-2007, the main control target is to build stable prices; in2008-2010, the property market regulation repeated, monetary policy at the beginning of2008is from the’moderately tight’to’tight’ monetary policy. By the end of2009, the central government decided to launch more severe real estate regulation policy. China property market went into winter. In2011, property market turnover a fell sharply, more experts worry that the property market will appear crash.Therefore, based on the close relationship of real estate industry and government, this paper put forward assumption:executives political background can markedly improve real estate performance of listed companies. At the same time, in the present severe situation the real estate enterprise facing with, the author thinks that the result of this paper helps to real estate industry to adopt other ways to improve enterprise performance.This thesis selects the companies which listed in Shanghai and Shenzhen stock exchange as the sample, and selects data from2008to2011.There are three hypotheses in this thesis. So I verify three aspects:the political background of executives and company performance; the differences between the local and central background of executives; political background of executives and profitability. Then I do further regression analysis.The first part is the introduction. This part shows the theoretical and actual significance of this study and the solution to salve difficulties the real estate company faced with.The second part is the literature review and evaluation. This part includes the definition of political connection, the economic consequences of political connection, and the prospect on future studies.The third part is research design. Firstly, the thesis puts forward the three hypotheses. These hypotheses are:the political background of executives can raise corporate performance notably; the local background can raise corporate performance more than central background; the political background of executives can raise corporate financing capacity notably. Secondly, the thesis lists the sample and data sources. Finally, the thesis lists nine models according to the three hypotheses.The fourth part is empirical analysis of the thesis. This part verifies the three hypotheses. Particllarly, in this thesis, the performance of the company is divided into market index and economic indicators, which are ROA and Tobin Q. What’s more, this part also descripts the general condition of political background.The fifth part is the main conclusions and policy recommendations. Based on the four parts above, the thesis lists the main conclusions and policy recommendations, and makes self-criticism on the shortcomings of the study. Finally, we make a prospect on the future research.