Executive Political Relationship Effect On Enterprise Value Of The Private Enterprises

The development of China’s economy is booming in the21st century, after thegovernment conducts a series of economic reforms, China’s market economy startedrapid development, China’s economic system constantly close to international standards.Enterprise is the smallest unit of economic development and the important supportstrength, due to historical reasons of economic development, our country enterprisesmost are state-owned enterprises or state holding enterprises. With the reform andopening up, private enterprises accounted for under20%of the total enterprises, thedevelopment of state-owned enterprises have congenital advantage, the privateenterprises are good models of self-made, its development has many limits: financingdifficulties; high entry barriers; hard to form scale effect and so on. But privateenterprises play an important role in the economic development. it promotes theeconomy to more freedom and bring more fresh blood.Many scholars study shows, executive political relationship as an alternativemechanism can help enterprises to improve the value. this kind of phenomenon is moreobvious especially in the private enterprises. Political relationship of private enterprisesinfluence enterprise value will be influenced by many factors, such as the executivepolitical types, regional government intervention and national preferential policy, etc. Inprivate enterprises, will the different types of politics relationship have different effecton the enterprise value? If the area of economic development level is different, do thepolitical relationships have different influence on the enterprise value? If these are bothcorrelations of influence factors, then how will they affect? The essay will do anin-depth study.First, the essay has a summary of the political relationship effect on enterprisevalue through the literature search method; Second, have an explain of related theory ofthe political relationship and enterprise value; Again, on this basis, put forward theassumptions in the essay, then select a sample of the Shanghai stock exchange,Shenzhen stock exchange a-shares private companies, excluding the data does notconform to the conditions, using SPSS17.0to multiple linear regression, inspect therelationship between political relationship and enterprise value; Finally, according to theempirical results conduct theory explanations and then put forward my own advices.Results show that the political relationship has a positive effect on enterprise value,and indirect political relationship influence on the enterprise value is higher than thedirect political relationship influence on the enterprise value. And this effect is affectedby the level of regional economic development, in the areas of high economicdevelopment level, the effect of political relationship to the enterprise value is small; On the other hand, in the area of low level of economic development, political relationshipinfluence on the enterprise value is strong. That illustrate that the impact of politicalconnection to the enterprise value is affected by the level of regional economicdevelopment.The essay combs the relationship between political relation with enterprise value inboth theoretical and empirical process. Whether executives of the private enterpriseshould establish a link to politics or how to establish a link between political, providesome advice.