The Research Of Political Connection Enterprise Performance And Earning Management

Since the concept of “political connection” was put forward, the general scholarstook the political connection as a target to research the enterprise performance andearning management. But the relationship between political connection withenterprise performance and earning management is positive or negative influence, theproblem has not formed a consistent conclusion. It is largely related to the systemenvironment. Our country is in a transition period of planned economy to marketeconomy, the market also cannot play a full role in allocation of resources, the abilityof government intervention is still large, it creates conditions for enterprises toestablish a link with political. So, the research that the political connection impact onenterprise performance and earning management is very meaningful.First, this paper made theoretical foil for the study of political connection, fromsystem theory, social capital theory, resource dependence theory, rent-seeking theoryand other aspects to explain the enterprises to establish a link between politicalmotives.Second, we chose2010-2012in Shenzhen stock exchange listed GrowthEnterprise Market as the research sample, using empirical analysis to study therelationship between the political connections with enterprise performance andearning management. From the top ranks, in state-owned shares, governmentsubsidies to build political relevance index, through regression analysis inspection ofthese factors, the relationship between earning management and enterpriseperformance.The results showed that the political connection has a significant effect oncorporate performance. On the one hand, from the perspective of political connectionindex listed private enterprises in China’s political connection is negatively related tothe enterprise performance, the higher the degree of political connection, the lower thelevel of performance; Senior positions, respectively, on the other hand, the proportionof state-owned shares, government subsidies as explained variable to study theirrelationship with corporate performance, the final result shows that they have a negative impact to the enterprise performance, and do to appear this kind ofphenomenon the reason related to explain.In terms of earning management, regression results show that the political isassociated with earning management related to the same political connection index,senior positions, the proportion of state-owned shares, government subsidies asindependent variables through model test, and the regression results are analyzed.Finally, elaborated the political connection, business performance and earningmanagement of the relationship between the three.