The Value And Heterogeneity Of Corporate Political Association

As a recent hot research area,corporate political association refers to the close relationship between enterprises and government organizations,politicians or government officials(Faccio,2006).China is a country with a highly centralized planned economy to a market economy,the relationship between the government and the enterprise has been a topic that is not open,the political connection of the enterprise is a common phenomenon in our country.The political connection to the enterprise,especially the private enterprise,brings the direct economic benefits such as the financing convenience,the tax preference and the financial subsidy,the government regulation and so on.Because of the political association of private enterprises to bring property protection,financing convenience,direct economic benefits of tax incentives,government subsidies and government regulation,industry access and convenience,so a reasonable inference is that there is a positive correlation between political association and private enterprise performance,the performance of political association will help enhance the associated enterprises.However,empirical studies have not given consistent evidence of political association of private enterprise and enterprise performance relationship,different research conclusions differ greatly: a positive correlation between the two(Tian Lihui and Zhang Wei,2013;Luo party theory,2008),negative correlation(Deng Jianping,2009;Aman Chang,2010),there was no significant correlation the relationship(Wu Wenfeng,2008;He Dexu,2011).How to explain the "paradox" phenomenon of the relationship between the corporate politics and enterprise performance?Whether the relationship between the political relevance of the private enterprise and the performance of the enterprise is of no value? This kind of question is not without reason,because the above about the private enterprise political connection brings the economic benefit the experience research mostly based on the section data,the missing variable brings the intrinsic problem may cause the deviation.Based on this,the central government in eighteen after the increase of government officials of corruption remediation efforts under the background,to government officials associated with the listed company by the judicial investigation for the event,to examine the political connection of enterprises by analyzing the following three specific problems by using the event study method to enhance the value of corporate political association China phenomenon under the background of transition understanding: first,government officials are subject to judicial investigation and related enterprises,the shares of listed companies,whether to respond? If the share price of listed companies to make a negative response,which indicates that corporate political association is valuable.Second,does the value of corporate political association have heterogeneity? Different attributes of the political association of officials were found to be different? Third,the value of different types of political association is a complementary relationship or an alternative relationship?This paper selects 2013-2015 as the government senior officials sacked and involved by the judicial investigation of the 71 listed companies(a total of 71 valid samples,of which 40 state-owned enterprises,31 private enterprises),using the event study method,the empirical results show that:First,executives of listed companies by the judicial investigation of the announcement day abnormal return and(-1,3)during the cumulative abnormal returns were significant at the 1% level is less than zero,loss of corporate political association will have a significant negative impact on the enterprise value,which indicates that political connection is of value for the enterprises.Second,corporate political association has heterogeneity.According to the equity property are different,the sample is divided into state-owned enterprises and private enterprises,the event study results showed that two of the cumulative abnormal return rate were significant at the 1% level,but the cumulative excess return of private enterprises is significantly greater than the negative rate of state-owned enterprises,that in the face of political Association lost shock,private enterprises than state-owned enterprises suffer more.At the same time,the results of multiple linear regression analysis show that the heterogeneity of the equity attribute has a significant impact on the cumulative abnormal returns,which indicates that the value of the corporate political association is heterogeneous.Third,multiple linear cumulative abnormal return on the company executives suspected of corruption in the government was investigating the incident,the regression analysis shows that the private enterprise executive deputies or CPPCC members identity has no significant influence on the cumulative abnormal return,which shows that government officials associated with the deputies or CPPCC members associated with the political class is not related to the value of there is no complementary or alternative,the relationship between the two.The innovation of this paper is mainly reflected in the following aspects:(1)the existing literature in the study of Political Association for adopting cross section data influence enterprise value,will face the endogeneity problem of omitted variables generated;and this paper uses the event study method can avoid the endogeneity problem of leakage variable brings,increase reliability conclusion;(2)the results of this study show that the heterogeneity of corporate political association is one of the reasons the relationship between corporate political association and enterprise value paradox "phenomenon.(3)the study of this paper explores the relationship between the value of different types of political association.For private enterprises,the value of the value of the political relationship between the government officials and the value of the political association of executives of the NPC deputies or CPPCC members have no relevance.