Research On Political Connection And High-tech Enterprises’ Innovation Investment

Since 30 years of reform and opening up, high-tech enterprises, which have become one of the important forces to support national economic development, have made tremendous growth. How to evaluate the listed high-tech enterprises’ innovation investment, and explore the impact factors of innovation investment, has always been a hot topic in the research of corporate finance in recent years. At present, China is in the period of economic transition. Government can not only dominate many resources, but also has big power for market regulation. So government behavior is an important factor that influences enterprise’s survival and development. In order to obtain preferential policies, financing convenience and system resources form the government as many as possible, it has been a common phenomenon that high-tech enterprises are associated with all levels of government to establish political connection. Therefore, research on the influence of political connection of listed high-tech enterprises to innovation investment has practical and theoretical significance.Based on theories at home and abroad about political connection, we collect the rent-seeking theory, reputation mechanism theory, alternative mechanism and social capital theory. By combining theoretical and empirical analysis, the article uses 752 listed high-tech enterprises on SME and GEM in Shenzhen, China as sample to study the different impact of political connection on innovation investment. The research interval is 2007 to 2012. Using the relationship between political connection and resource requisition of the listed high-tech enterprises as a starting point, we discuss the influence of high-tech enterprises’ political connection to innovation investment. We classify high-tech enterprises according to their political connection structure, political connection hierarchy, explore effects of different political connection level and different political structure to innovation investment. Then we classify high-tech enterprises according to their ownership nature, and explore the effect of political connection to innovation investment under different ownership.Through theoretical research and empirical analysis, we draw the following conclusions: firstly, political connection has positive effect on innovation investment for high-tech enterprises, which means high-tech enterprises can get more resources, remedy the defect of law and prevent government form damage to property through constructing political connection. Secondly, high-tech enterprises with director’s political connection invest more in innovation than those with CEO’s political connection. Because high-tech enterprises with director’s political connection pay more attention to the long-term value of enterprises, so they are more willing to provide fund for technological innovation. Thirdly, relative to the high-tech enterprises with central political connection, high-tech enterprises with local political connection have stronger relationship with innovation investment. Fourthly, among enterprise with political connection, relative to state-owned high-tech enterprises, those private high-tech enterprises can make full use of advantage of political connection. And in the end, we put forward some relevant policy recommendations according to the above conclusions.