A Study On The Dynamic Financial Effect Of Political Connection

Since the reform and opening policy is implemented,ownership discrimination has been a major constraint to the development of private economy.Entrepreneurs of private economy will generally choose to established a political connection by become a NPC or CPPCC member to solve this problem in practice.Previous studies have shown that political identity can overcome the financing problem of private firms to a certain extent.On the other hand,after 30 years' development,family enterprises has ushered in the peak of the first intergenerational transmission.Can political connection still alleviate the financing constraints after intergenerational transmission? The existing research does not take how the political connection performance before and after intergenerational inheritance into account and just consider intergenerational inheritance and political connection as isolated phenomenon.In this context,this paper explores the financing effect of political connection from the angle of intergenerational inheritance.This paper first combs current theories about political connection and intergenerational inheritance of family enterprises.And then combine China's political system transformation and current situation of the family enterprise inheritance,theoretically analyze and explore the mechanism of how the difference of financing effects brought by political connection in different generations form.Last,this paper take family enterprises on year 2003 to 2014 as sample,regards entrepreneurs work in Chinese people's political consultative conference or National People's Congress as the standard whether the political connections is established.Divide the data samples into two categories,which are not entered into the intergenerational transmission and have entered the intergenerational transmission.Establish the empirical model to explore the differences of financial effects of political association on private enterprises between before and after the intergenerational inheritance.The empirical results show that:(1)the elder generation of family enterprises which with a political connections get more loans when they have not entered into the intergenerational transmission.(2)Sons' political connections does not promote the loans of family enterprises.(3)The finance promoting effect of the political connection of family entrepreneurs in our country has declined after the intergenerational transmission.The innovation points of this paper are mainly in the following aspects: First,this paper extend the research perspective of financing effect on family enterprise political connection to the successor generation.Exploring the economic effect of political connection from the dynamic perspective.Expand and deepen the study of political connection.Second,combines the political connection and intergenerational inheritance of family enterprises together,realize the innovation of research content through interdisciplinary way.