Study On The Political Connection Effect Of State-owned Shares In Private Enterprises

With the development of the global economic and political integration，theenterprises pay more and more attention to the use of political strategy. Based on thedata of many countries，foreign scholars found that the political connection widelyexists in various countries. In order to obtain the advantage in the fierce marketcompetition，Private enterprises try all ways to establish a good relationship with thegovernment to protect their own property and get resources interests.Current research shows that like ownership structure and diversification strategy，enior management’s political background will change the company’s performance as acharacter variable. Traditional corporate governance theory focuses on the dispersedownership structure optimization. Political connection theory political system，socialcaptital etc into the corporate governance system. It expands the original researchcontents of corporate governance，so it has certain theoretical value.Based on personal network research，previous studies includes the participation ofprivate entrepreneurs， hiring current or former political officials and privateentrepreneurs’ personal network construction. Most of them ignore the special politicalconnection way that private companies introduce the state-owned shares or keep acertain proportion of state-owned shares in the corporation. Different from theentrepreneurs participating in government，the state-owned equity represents a naturalconnection with the government. State ownership has the function of reputationmechanism. It transfers the signal of the power of the company that the enterprise hasget the support of the government，helping private enterprises to obtain governmentprocurement，get state bank financing and so on. The way of political association ofprivate enterprises is institutional，it may paly a more important role than entrepreneursparticipating in government.Based on the analysis of political connection and regulatory barriers encounteredby private enterprises in our country，the paper cited the Shanghai and ShenzhenA-share listed private enterprise data to investigate the relationship between theintroducting of state-owned shares and breaking industry barriers. The paper still studiesthe substitution relationship between them. Research shows that the private enterprisesintroducing or keeping state-owned share is an effective way of political connection.There are more campanies who has state-owned share get in to the regulated industries. The study also found that introducing or keeping state-owned share can be a substitutefor the entrepreneurs participating in politics.