Political Connections、 Auditor Choice And Enterprise Value Of Private Enterprises

After more than 30 years of reform and opening up,the private economy has overcome its weakness, such as weak foundation, and has become an important part of the national economy. Even more, it has become the briskest economy point of growth in national economy. Objectively speaking, the development of private enterprises is turning to the medium-term stage, towarding a more rational and more scientific direction. The development of private enterprises has a close relationship with the China’s economic success, it has also become an important part of the national economy. According to the related statistics, the growth rate of the private enterprise’s annual output has been maintained at about 30%, much higher than the rate of the national economic growth in the same period. The private enterprises has an outstanding position in the national economy. It also has played an important role in the social development, especially in the area of expanding urban and rural job growth. Therefore, the study of private enterprise has become a hot topic.Domestic and international studies have shown that political connection of the enterprises has a positive effect on the competitive advantage and survival of these enterprises. Compared to the state-owned enterprises, the political connections of the private enterprises ties more closely to its survival and development. As the particularity of China’s market economy, China’s various systems is not perfect, but private enterprise in this case still made a rapid development. Therefore, researching Chinese private enterprises’political connection from the perspective of China has a practical significance. As China is a big country, differences of the economic and legal conditions among regions can not be ignored. How will the legal conditions in different areas impact the enterprises? What can we get from the study of the impact? This article will talks about how the political connection of the actual controller and the legal environment impact the auditor’s selection of the private enterprises.This paper takes the private listed companies of the Shenzhen and Shanghai Stock Exchange from 2009 to 2011 in China as samples, then build the appropriate regression model, do empirical analysis using statistical software STATA11.0, including descriptive statistics, correlation test, logistic regression analysis and multiple linear regression analysis. The result comes to the conclusion that compared to the enterprises whose actual controller don’t have political relations, private enterprises with political relations are more likely to choose highly-qualified auditors. After that,we added the element legal environment, we find out that compared to the private enterprises in less developed areas, the enterprises in a good regional legal environment with political connection tend to choose highly-qualified auditor. Results of this research not only enrich the political relevance of literature, but also has certain enlightenment to the construction of legal system of our country. It shows us that the government should strengthen the legal constraints, improve the institutional environment and reduce regional environmental differences, in order to build a better external environment for the companies. Then the companies will intend to choose highly-qualified auditors.