Research On The Influence Of Political Connection On Firm Performance

With the rapid development of the world economy,market competition has become increasingly fierce.In order to help them develop in a fierce competitive environment,enterprises will have the motivation to establish a good relationship with the government.Political associations are ubiquitous in all countries of the world.The company's commitment to establish political connections with the government has also attracted the attention and research of scholars at home and abroad.In the process of China's economic restructuring,the economic status of private enterprises has been greatly different from that of the past,and their contributions to employment,taxation,and other aspects have greatly increased.At this stage,China is in a critical period of economic transformation.The perfection of relevant laws and regulations has yet to be improved.There is a lack of protection of private enterprises' property rights,and the government plays a key role in the allocation of resources.In this case,some private enterprises hope to establish political connections to seek institutional protection and acquire more scarce resources.The enterprises with political connections can often obtain support from the government,allow enterprises to occupy a dominant position in the fierce competition environment,and have an important impact on the growth of corporate performance.At this time,it is more important to study the influence of corporate political association on performance.In view of this,this paper analyzes and studies the influence of the political association of private listed company executives on firm performance,and analyzes the intrinsic mechanism of this influence from a deeper level,revealing the microcosmic mechanism of political association affecting corporate performance.After expatiating on the factors that influence political association and corporate performance,this article reviews the domestic and foreign literature on the factors that influence the political association to corporate performance,and combines related theories to analyze the micro-effect mechanism that has impact.Taking 862 private listed companies listed on the Shenzhen Stock Exchange and the Shanghai Stock Exchange from 2010 to 2014 as samples for research,after controlling the relevant variables of company characteristics and governance,through rigorous empirical analysis,the impact of political association on performance is analyzed.And the microscopic mechanism of action provides reliable empirical evidence.The conclusions of the study are as follows:(1)There is a significant positive correlation between political associations and corporate performance of private listed companies.That is to say,the political connections of senior executives can promote the performance of the company.(2)Political associations can indeed influence corporate performance throughgovernment subsidies.That is,government subsidies are an effective path for political associations to promote performance.Enterprises with political linkages can obtain more government grants and can help companies achieve business goals.(3)Through empirical research,it has also been found that tax preferences are the path of political association to improve performance.Enterprises can enjoy lower actual tax rates and lower actual costs by establishing political associations,thereby promoting performance improvement.Therefore,through this research,it is concluded that the political association of private listed companies has a positive and positive impact on the performance.This clarifies that the academic community's political association is accompanied by a “supporting hand” or “arresting hand”argument.There is a role.In addition,this paper also concludes that government subsidies and tax incentives are the microcosmic mechanisms that affect the corporate performance through political connections.The reason for this positive effect is that political affiliates enjoy more government subsidies and tax incentives,revealing the logic of how political association affects corporate performance.