The Empirical Study On The Relationship Of Political Connections,Corporate Social Responsibility And Corporate Value Based On Chinese Private Enterprises

In the 21st century,with rapid economic development,China has become the world's second largest economy.In the environment of economic reform in China,the private economy booming in recent years has become an integral part of the national economy.Continuous growth of private enterprises has been providing fresh blood for China's market economy and promoting the stable and healthy development of China's market economy.Nevertheless,compared with state-owned enterprises,there are still a lot of difficulties and obstacles in the development of private enterprises,including financing difficulties,trade barriers etc.In addition,China's current legal system and resource allocation mechanism are both still not perfect enough,which allow some private enterprises have begun to actively seek another informal alternative mechanism-political connection to meet the needs of their own development.Many studies have shown that the political connection as an alternative mechanism helps enhance the value of the company,which is more significant in private enterprises.In this context,seeking the relationship of political connection and corporate value seems more important.Economic development will inevitably cause social problems.In recent years,food safety,environmental pollution and other social problems occur frequently,so that the government and the public value the performance of corporate social responsibility more seriously.In the background that the government actively advocates the building of a harmonious society and a beautiful China,those political connected private enterprises have been given high expectations by the government.Therefore,private enterprises have begun to actively fulfill their corporate social responsibility and establish a good corporate image while searching for political relevance.Thus this contributes to the synergy of political connection and achieves the added value of the company.In short,fulfilling corporate social responsibility and seeking political connection are related ways to enhance the value of the private companies.Empirical study will be used to analyze the relationship among political connection,corporate social responsibility and corporate value in this article.Firstly,the essay literature sorts out and summarizes present study about political connection,corporate social responsibility and corporate value;Secondly,explain the related theories of political connection,corporate social responsibility and corporate value;Again,propose theoretical assumptions based on the previous theories of this article,then choose A-share private listed companies from 2010 to 2014 as samples,excluding ineligible data,using STATA12.0 to multiple linear regression to verify hypothesis of this paper;Finally,draw empirical analysis conclusions and make recommendations.Through empirical research,this paper concludes several research results:First,private enterprises can use the political connection legitimately in order to promote corporate value.In background of our immature market economy,incomplete laws and regulations,private enterprises establish contact with the government to make up for deficiencies,and to obtain the necessary resources to their survival and development,which will bring more revenue for private enterprises and thus enhance the corporate value.Second,the political connection and fulfilling corporate social responsibility are positively correlated;at the same time,fulfilling corporate social responsibility helps improve the corporate value.Since food safety and environmental pollution and other social problems frequently occur today,the public and the government begin to pay attention to corporate social responsibility.Political connected private enterprises are placed high expectations,thus they will assume more social responsibility,and ultimately add the corporate value.Third,corporate social responsibility plays an intermediary role in the influence of political connection on corporate value.Political connected private enterprises tend to better fulfill corporate social responsibility to further enhance corporate value.Based on the findings,the paper proposes the following recommendations:First,private enterprises should rationally use political connections to promote the sound development of enterprises,and prevent the establishment of political connection through bribery,collusion and other illegal means which harm the interests of society;secondly,the government can appropriately guide private enterprises to fulfill their social responsibility through political connection;finally,regulate legitimacy of political connections and punish abuses to advocate healthy competition in the market.In empirical research,this paper uses data of private listed companies as samples and fully takes account of the economic background and the political background of the stage,to better verify the conclusions.In addition,the paper adds corporate social responsibility as the mediating variables when studying the relationship of political connection and corporate value,in order to explore its mediating effect.This paper differs from most other scholars when selecting variables.The paper uses the results of RKS,which measures the fulfillment of corporate social responsibility more effectively.