| Political connection of enterprise is a worldwide problem, which is common in countries around the world, and in the environment of current China’s specific political and economic system transformation, political connection of enterprise are relatively common. Although since 1992 the market economic system established and continued perfection, in the economic transition of China, the government still holds many key resources, which are necessary for the enterprises’ development, and the intervention on the economy is still strong. In order to be able to occupy the dominant position in the fierce market competition, enterprises make efforts to improve themselves various aspects of strength, and at the same time constantly seek opportunities to set up a variety of closely contact with the government. Through various channels builds a direct or indirect contact with the government, which is called "political connection" or "political relations".This paper adopts the method, which is combined normative research and empirical research, to study the influence of the political connection on enterprise performance. On the basis of reviewing the relevant literature at home and abroad, this paper introduces the definition of political connection and choice of measurement method as well as motives and methods, which enterprises establish political connection. When we sort out the literature, which is the effect of political connection on enterprise performance, find that political connection is a "double-edged sword". The enterprises through the political connection can obtain benefits, like financing facilities, property rights protection, tax breaks and industry deregulation. But the enterprises need pay a certain cost to build and maintain political connection, such as management of enterprise may be limited by the "visible hand" of government intervention and shoulder some functions of the government. In order to solve the local employment problem like increasing additional personnel, increasing the burden of the enterprises, and even appearing the inefficiency of activities such as excessive investment, the operation of enterprise deviates from the profit maximization goal and damage the interests of the enterprise. Therefore, at present academia don’t have a consistent conclusion that political connection is the "hand of support" or " hand of predatory". Some scholars believe that political connection can improve business performance, but also some scholars believe that political connection will hurt enterprise performance.On the basis of analysis, which combines with relevant theory, this paper selects the 406 companies, which list on the GEM, as the research sample. According to the requirements of this study, it eliminates 19 companies and eventually selects the 387 companies, which list on the GEM, as research samples. It conducts empirical analysis to a total of 1548 data from 2010 to 2013. The following conclusions: in the short term, political connection of senior executives brings to the enterprises financing advantage, tax incentives, scarce resources and so on to improve enterprise performance; But it can’t bring to enterprises continued ascension of enterprise performance, in a long time excessive using political connection can make enterprises of rent-seeking costs to constantly increase and appear the inefficiency of behaviors such as increasing employment and expanding investment. The operation of enterprise deviates from the profit maximization goal and damage the long-term performance of the enterprise.Combined with the result of empirical analysis, finally from the perspective of political connection the paper puts forward some policy suggestions, which are suitable for the healthy development of listed companies in our country, in order to give our country’s enterprises how to correctly, reasonable select and use of political association, and provide certain realistic guiding significance to the maximum improvement of enterprise performance. |
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