Institution Environment, Political Connection And Investment Efficiency

In China’s economic growth, investment has played a vital role. But according to a large amount of data,due to various reasons the phenomenon of inefficient investment in enterprises especially for private enterprises is very normal in the actual business activities. Our country is in the period of economic transition, market-based degree is relatively low, the government play an important role in business activities and had a significant influence on enterprises. So enterprises via various means to build the relationship between government and firms. For state-owned enterprises, to establish this relationship is relatively easy, and the general relationship is formed by the government appointed the relevant personnel as the executives of state-owned enterprises. But for private enterprises, to set up these political connections maybe a little difficult. They often encourage their executives to compete for representatives of NPC and CPPCC or hire the workers and government officials join in the enterprises and to establish a political connection.scholars has proved that in various countries and regions the political association is a kind of universal relations, but its specific impact on every aspect of the enterprise is not have the same conclusions. On one hand, the relevant scholars believe that political connection in imperfect institutional environment areas have played an alternative role, the enterprise will benefit from scarce resources, property rights and protection, and improve the investment efficiency of the corporate; In some cases, on the other hand, the political connection may be the "hand of plunder", reduce the investment efficiency and damage its value. Based on the data of A-share listed private enterprises from 2010-2014, and through descriptive statistics, correlation statistics and empirical analysis to study the effect of political connection to the investment efficiency of the enterprises. In order to study the influence of the institution environment on political association and the investment efficiency this paper divided the institution environment. And the study is more about when the private enterprises in different environment, the impact of political connection on investment efficiency. Through the above analysis the conclusions is as follows:First of all, without considering other factors the political connection helps to improve the investment efficiency of enterprises.Second, although in the analysis, the institution environment is valued by different indicators, the final results show that both in poor and good institution environment the political connection is significantly had a positive impact on investment efficiency.First of all, linking institution environment, political association, and the investment efficiency together is a bright spots and innovation point in this article, in the existing literature there are more study about the relationship between institution environment and investment efficiency, and political association and the investment efficiency.But linking the three factors together is less common; Second, the research sample will be limited to the private enterprises.It is also a prominent characteristics in this paper. General study about political association and the efficiency of investment did not divided according to the nature of property right. In different enterprise the reason for forming the political relation is also different. In this paper mainly studied the private enterprises。In certain circumstances the institution environment and political association existence alternative relationship, and combing the three factors may achieve a more comprehensive conclusion. The conclusion of this paper is basically confirmed the hypothesis puts forward in the article, and offers recommendations for firms long-term development and the transformation of government functions.