A Study On Political Connection, Marketization Process And Top Management Turnover

Schlors have always paid special attention to top management turnover, which is animportant aspect of corporate governance study. Under the background of transitioneconomy, private enterprises have set up modern enterprise system and improved internalgovernance strcture. The behavior of enterprise is closely related to external environment.As government environment is fatal to private economy, private enterprises’ politicalconnection have influence on internal governance arrangements.This paper selects Chineseprivate direct listed enterprises during2007-2012as samples, excluding the backdoorlisting firms. This paper studies private enterprises’ turnover mechanism and the impact ofprivate enterprises’ political connection on top management turnover by theoretical andempirical analysis. First, on the basis of Agency Theory and Government InterventionTheory, this paper analyses turnover mechanism from the view of corporate performanceand the stylized facts of private enterprises’ turnover mechanism. Then, we analysethrough which path that political connection affects top management turnover. Last, thispaper conducts the study in the marketization process and studies whether there aredifferences in the relationship of political connection and top management turnover intheregion of different marketization process.The results show that, in private enterprise, turnover mechanism functions well andcorporate governance is well arranged. Top management turnover mechanism functionswell. But, political connection disturbs top management turnover and sets negativeinfluence on internal governance mechanism of private enterprise. Also, in the region ofbetter marketization process, marketization doesn’t change the sustaning action ofgovernment, political connetion still impacts top management turnover negatively.Compared with existing literature, this paper deepens the study on top management turnover of private enterprise. It helps to understand private enterprises’s internalgovernance. This paper analyses through which path that political connection impact topmanagement turnover and contributes to a better understanding of political connection’sinfluence on the mechanism of corporate governance. This paper also helps privateenterprise take proper attitude towards political connection and improve corporategovernance in marketization process.