Political Connection,Administrative Concession And Business Performance

In the initial stage of the construction of socialistic market economic system,China's market order was not complete,and the distribution of some resources were still decided by the government.Establishing a close relationship with the government to obtain survival resources is one of the important political strategies of the current Chinese enterprises.Administrative charter is the approval behavior entrusted to private party to use resources by the government representing the country.In terms of the selection of administrative charter target,political tendency also exists.Since 1980 s,China has been exploring the marketization reform in administrative charter area.In 2015,the issue of Regulation of Administrative Charter of Infrastructure and Public Utilities promoted the marketization in China's administrative charter area greatly,which played a positive role in regulating administrative charter behavior,expanding the liberalization of charter area and introducing competitive mechanism,having a deep influence on China's administrative charter's approval behavior and enterprises' franchising behavior.This paper took A-share listed companies during 2012 and 2017 as samples to study the role of political connection in the enterprise's acquisition of administrative concession and the influence of this kind of franchising behavior on enterprises' performance tables.Finally,this paper further confirmed whether the issue of Regulation of Administrative Charter of Infrastructure and Public Utilities corrected the influence of political connection on administrative concession sensitivity as an important measure and the change of the performance of franchising enterprises before and after its issue.The research result of this paper shows that: 1.In China's current administrative charter area,state-owned enterprises are still in the leading position and non-state-owned enterprises don't account for much.The positive establishment of political connection of non-state-owned enterprises is beneficial for them to obtain administrative concession,and the issue of Regulation of Administrative Charter of Infrastructure and Public Utilities weakens the influence of political connection to some extent;2.Administrative concession content brings big profits to enterprises,however,a small amount franchising behavior are not enough to improve the total profitability level of them,which can only improve the performance of the whole enterprise after being expanded to a certain scale;3.Political connection can influent enterprises' business performance on both “supporting” and “depredating” way.Political connection can bring concession to enterprises.But being influenced by political targets,too many directors with political backgrounds will inhibit the high returns of enterprises' concession;4.The issue of Regulation of Administrative Charter of Infrastructure and Public Utilities stimulated the improvement of administrative chartered enterprises' efficiency,compensated for the cost of resource distribution brought about by intensifying competition and improved enterprises' performance.To better play the synergistic role of government intervention and market readjustment,this paper put forward the following advices: 1.Enterprises should change from facing the government into facing the market.In the process of transformation,they should grasp the extent of political connection,that is to say,take advantage of the “relationship” of political connection and at the same time avoid the influence of too much “intervention”;2.China should accelerate the process of marketization reform,speed up the transformation from “managing type government” into “serving type government”,and play the determinant role of the market in resource distribution;3.The government should further strengthen the supervision of administrative charter's approval and revealing of relevant information.It should perfect the legislation and policies matching with charter regulation,provide financing channel and information platform for chartered enterprises,encourage diverse economic entities to enter administrative charter area,and further improve the liberalization level of administrative charter area.