Product Market Competition,Political Connection And Corporate Risk Taking

Research on political connection is active in the academic community for a long time.Whether the government plays the role of "Supporting-Hand","Predatory-Hand",or "Hands-Free-Hand" has different opinions.In recent years,the intensified market competition has exerted an important influence on the investment and financing of enterprises.As an informal alternative mechanism,the role of political connection has become increasingly prominent.This article,for the first time,attempts to use political relevance as a regulated variable to examine its role in product market competition and corporate risk assumption,and has certain novelty and uniqueness.Based on the theory of resource dependence and information asymmetry,this paper uses the Shanghai-Shenzhen A-share listed company from 2008 to 2016 as the research object,and combines existing research results to examine the efect of political connection between product market competition and corporate risk taking.The empirical results show that political connection can effectively mitigate the declining effect of product market competition on corporate risk taking.That is,political connection play a role of "supporting hand" when the firm's market competition is fierce,and enhances the company's risk-taking level.After further dividing the enterprise into state-owned enterprises and private enterprises,it was found that the conclusion was still established in private enterprises but not in state-owned enterprises.The higher the level of political association of private enterprises,the more obvious the adjustment of political connection.At the same time,this paper also makes a channel test on the influence of political connection on the product market competition and risk-taking for enterprises,and it finds that political association can improve corporate risk-taking by easing financial constraints.The research in this paper not only enriches the research of political association and enterprise risk assumption,but also has a more objective and multi-perspective understanding of the relationship between government and enterprise.This has significant practical significance for the development of enterprises and economic growth.