The Influence Of CEO's Ability On The Company's Investment Status Under The Entrepreneurial Political Relevance Dimension

The investment status of the company is not only the prerequisite for the enterprise to seek profits and reduce the risk,but also the necessary conditions for the continuous development and the improvement of the market competitiveness.With the gradual establishment of the deepening reform in terms of China's economic development and the modernization of the economic system,political factors become increasingly prominent when it comes to the operating efficiency and the allocation of resources.Political relationship not only undermines the fairness of market competition,but also inspires CEOs to establish political connection.The intergenerational transfer of political relations leads to the rentseeking behavior in the process of investment,which provides conditions for the emergence of corruption.Based on the study of domestic and foreign scholars,this paper studies the influence of CEOs ability on the investment status of the company from the perspective of political relevance.This paper studies 163 listed companies registered in Shanghai from 2009 to 2016,and analyzes the following points: first,the influence of CEOs on corporate investment level and investment efficiency;second,when involved in the entrepreneur political connection dimension,the influence of CEOs on company investment status;third,the difference between central political association and local political influence;fourth,faced with the internal financing constraints and the external debt constraints,the influence of CEOs ability on the investment status of the company from the perspective of political relevance.On the basis of theoretical analysis and empirical analysis,several conclusions can be given as follows.Firstly,in terms of the investment level,the stronger the CEO's ability is,the greater the scale of the company's investment will be.Furthermore,in terms of investment efficiency,on the one hand,CEO capacity will aggravate non-efficient investment for overcapitalized companies,on the other hand,CEOs capacity will ease non-efficient investment for undercapitalized companies.Secondly,with the gradual influence of the political connection,CEOs often furtherly expand the company's investment scale because of more generous financial subsidies and government support relying on political networks when it comes to the investment level.For overcapitalized companies,political relationship increases the confidence of CEOs,so they tend to expand investment scale,which worsens the non-efficient condition.For undercapitalized companies,CEOs have to expand investment level to make up for costs maintaining political networks,which moderates the non-efficient condition.Thirdly,compared with the central political connection,the impact of local political connection is more significant,regardless of investment level or investment efficiency.Fourthly,on the condition of the internal financial constraints,government support can help CEOs reduce the sensitivity of investment and internal cash flow.On the condition of the external debt constraints,CEOs can rely on political connections to get more credibility and many preferential access to bank loans and short-term loans,thereby reducing the sensitivity to external debt investment.Based on the above conclusions,this paper puts forward the limitations,and the further research directions in terms of CEO capability index,investment efficiency measurement and sample selection.