A Research On The Political Connections Of Family Firms,Financing Efficiency And Enterprise Performance

Private family-owned enterprises in our country are currently facing the problem of financing difficulties.Due to the particularity of our country's system,unlike most state-owned enterprises,central enterprises,or enterprises supported by the state,ordinary family-owned enterprises are individuals or families.They are privately owned and can not receive due attention from the state.Their own external creditworthiness and reputation are minimal,and a large number of borrowing structures are reluctant to borrow large sums of money to the family business.These institutions think that the average family business is not reliable,there is a high risk of repayment.Therefore,the lending cost will be several times higher than large-scale enterprises financing costs,and some credit agencies do not even lend money directly to the family business,resulting in that the family business is in urgent need of money development stage,but not sufficient financial support.In order to alleviate this financing pressure,family businesses can establish political ties and seek the support of the government so as to obtain many invisible but felt resources and influence.So,in view of this,on the basis of combing domestic and foreign literature and analyzing related theories,this paper takes 178 listed family-owned enterprises in China for the five years from 2012 to 2016 as the research object,and studies the relationship of political ties,financing efficiency and family business performance of the relationship,and then use CYMN Holdings Group's case validation of empirical research.In this paper,we use the political connections of the owners of the family business owners or of the senior executives of the kinship of the business owners to express the political connections of the family enterprises and also divide the political connections according to the level of the regional government,more accurate understanding of the political link on the financing efficiency and corporate performance.Through empirical research and case analysis,this paper draws the following conclusions.Firstly,the political relations have alleviated the problem of asymmetric information between enterprises and financing institutions,enterprises and the outside world,and have helped enterprises to establish a good reputation and enhance their credit so as to promote the financing efficiency.Secondly,raising the efficiency of financing means that the cost of financing is reduced,and the return to the enterprise is increasing.That is,the enterprise can make greater returns by investing less money and thus improving its performance.Thirdly,the financing that an enterprise obtains through political connections must be repaid on schedule in order to maintain its relationship with the government and its own image so as to urge enterprises to improve operational efficiency.Enterprises with higher political levels are more concerned with the image and enterprises need to increase their operating ability to repay them on time loan.Fourthly,family-owned enterprises thathave established political ties have promoted their performance through the enhancement of financing efficiency.Through research,this paper argues that enterprises should pay attention to the government's protective role in the economic activities of family-owned enterprises and alleviate the current unavoidable financing problems.From a large environment,laws and regulations should be perfected,a credit rating mechanism should be established,a sound financial system should be established and the financing channels should be broadened,which fundamentally solve the problem of corporate financing difficulties.