The Influence Of Political Connections And Institutional Shareholdings On Top Manager Turnover In Private Enterprises

In the modern enterprise system,the operating management ability of top managers directly affects the development of enterprises and interests of shareholders.Therefore,top manager turnover has always been a hot topic in the field of corporate governance.Top manager turnover is negatively correlated with business performance,and healthy corporate governance mechanism can promptly replace underperformed managers.Political connections are regarded as an important social capital,which can become bargaining counters of the entrenched position when top managers faced dismissal crisis and reduce the possibility of top manager turnover because of poor performance.Institutional investors have the advantages of capital scale,information handing,personnel training and venture management,so they have the ability and willing to participate in corporate governance,to prevent shareholders and managers from engaging in benefits expropriation,and to penalize managers with poor performance.Corruption is closely related to political rent-seeking,but in the background of large-scale and high-intensity anti-corruption campaigns,the political ecology is improved,the business environment is purged,the incentive of political rent-seeking is weakened,the dependence on distribution of administrative resources is reduced,the role of political connections acting as a post protection umbrella is disappeared,the market supervision force of institutional investors is enhanced relatively.Taking the opportunity of anti-corruption campaigns and based on the perspective of top manager turnover,this paper hopes to study the influence of political connections and institutional shareholdings on corporate governance under different political ecological environments.Taking the top managers of private listed enterprises in Shanghai and Shenzhen Market from 2008 to 2017 as the research object,this paper studies the different effect of political connections and institutional shareholdings on the turnover-performance sensitivity of top managers before and after the anti-corruption campaigns by applying the Logit model.The empirical results show that:(1)the rate of political connected top manager turnover is significantly lower than that of non-political connected top manager turnover,and the gap is decreasing in the year 2013 and later.(2)The political connections observably inhibit the turnover-performance sensitivity before the anti-corruption,while political connections have no inhibitory effect on turnover-performance sensitivity after the anti-corruption.(3)Institutional investors can improve the turnover-performance sensitivity,but according to whether a top manager has political connections to make a distinction,we find institutional investors cannot significantly increase the turnover-performance sensitivity when top managers have the political connections before the anti-corruption,however institutional investors can significantly improve the sensitivity of who have the political connections after the anti-corruption.After the large-scale and high-intensity anti-corruption campaigns,the advantages of political connections are disappeared,the external supervision power of institutional investors is enhanced,and the efficiency of corporate governance is improved.