Chinese firms’ political connection, ownership, and financing constraints

Chan, Kenneth S.; Dang, Vinh Q.T.; Yan, Isabel K.

doi:10.1016/j.econlet.2011.12.008

Cited by 153 publications

(84 citation statements)

References 6 publications

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“…Li et al (2008) find that China's private enterprises' party membership can help them to obtain more loans from banks and other state agencies [40]. Chan et al (2012) tested the relationship between political connection and financing constraints. They found that, compared with firms without political connection, politically-connected firms experience less financing constraints [19].…”

Section: The Roles Of Political Connectionmentioning

confidence: 99%

“…The first channel refers to the decision-making logic where the politically-connected board chairmen behave similarly to government officials [18] and push listed companies to invest more in ECER to achieve the government's goal. The second channel suggests that since political connection can bring resources to listed companies [19,20], companies may invest more in ECER in return. Due to the existence of these two channels, we can argue that listed companies with politically-connected board chairmen will invest more in ECERI.…”

Section: Introductionmentioning

confidence: 99%

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Does a Board Chairman’s Political Connection Affect Green Investment?—From a Sustainable Perspective

et al. 2018

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Using a sample consisting of China's listed manufacturing companies which issue A-shares on the Shenzhen and Shanghai stock exchanges from 2008-2014, this study empirically tests the relationship between board chairman's political connections and the amount of energy conservation and emission reduction investment. The results show that the existence of politically-connected board chairmen positively affects green investment. In addition, marketization degrees negatively moderate the relationship between political connection and green investment, which supports an institutional logic perspective. The amount of redundant resources also has the same moderating effect, which is consistent with the resource exchange perspective.

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Section: The Roles Of Political Connectionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Does a Board Chairman’s Political Connection Affect Green Investment?—From a Sustainable Perspective

et al. 2018

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“…In addition, due to the fact that development in the legal system is lagging behind comparatively, rent-seeking behaviour is commonly found among government authorities, and thus relations with the government are important to enterprises. Political connections can help Chinese enterprises, especially private enterprises, to gain special resources, such as financing convenience and preferential tax treatment, from the government (Yu and Pan, 2008;Wu et al, 2009;Chan et al, 2012). However, some studies show that political connections have reduced the information quality and transparency of Chinese listed companies (Chaney et al, 2011;Yi et al, 2012).…”

Section: 一、引言mentioning

confidence: 99%

“…As China is a developing country and a transition economy, the government has a deeper influence on the micro economy, and political connections can help enterprises, especially private enterprises, to gain unique resources from the government, especially local government, such as financing convenience (Yu and Pan, 2008;Chan et al, 2012), preferential tax treatment (Wu et al, 2009), tax avoidance (Luo and Wei, 2012), or entry into monopolised industries (Luo and Liu, 2009). However, political connections can reduce the information transparency of a company.…”

Section: Research Hypothesesmentioning

confidence: 99%

Political Connections, Analyst Following, and the Informativeness of Insider Trading in China

Zeng

Yao-zhong

2013

China Account Financ Rev

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Based on the theory of information asymmetry, this paper studies the predictive power of Chinese insider trading on a stock’s future medium- and long-term abnormal returns. The evidence shows that as a whole, Chinese insider trading can predict a stock’s future return in the medium term as well as in the long term, but this predictive ability is affected by factors such as the company’s political connections and analyst following and the ownership nature of its controller. In detail, the insider trading of companies with high-level political connections has significantly higher informativeness than that of non-politically connected companies, but the insider trading of companies with low-level political connections is not informative. Moreover, the effect of high-level political connections on the informativeness of insider trading is related to the ownership nature of the corporate controller. Among high-level politically connected companies, privately controlled companies’ insider trading has significantly higher informativeness than that of state-controlled companies. Analyst following significantly decreases the informativeness of corporate insider trading, but it fails to decrease to a larger extent the informativeness of the insider trading of companies with high-level political connections. This paper makes two main contributions to the literature. First, considering China’s special institutional background, it studies the impact of political connections on corporate insider trading, thereby expanding the perspective of insider trading research worldwide. Second, it is the first time in Chinese research that the positive effect of analyst following on reducing corporate information asymmetry has been tested from the perspective of insider trading, and thus the paper enriches China’s literature on securities analysts. What is more, our findings not only remind investors about the different levels of informativeness among different types of insider trading to help them in obtaining medium- to long-term abnormal returns but also give suggestions to securities market regulators on the types of corporate insider trading that should be monitored more.

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“…Consistent with previous studies, it also revealed by Shen et al (2015) that political connections are more prevalent in poor governance firms. Some papers look at the interaction between ownership structure (or type) and political connections (Chan et al, 2012;Al-Hadi et al, 2016). Issue on the link between corporate political connections and related party transaction as an expropriation mechanism is also discussed in some papers.…”

Section: Corporate Governance and Equity Ownership Structurementioning

confidence: 99%

A Recent Literature Review on Corporate Political Connections

Trinugroho

2017

JDM

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It has always been an interesting issue deliberating the connectedness between corporation and political power. There have been a substantial number of papers in the academic literature empirically studying what so call "corporate political connections" over the last 17 years. Using 81 papers published in 2010-2017 in finance, economics, accounting, management and other journals, in this present paper, I provide a recent literature review on firm political connections particularly with respect to the empirical studies discussing the impact of being politically connected firms. A number of issues related to the effect of political connections on corporate strategy, behaviors and outcomes have been addressed. Few other papers provide different perspective by looking at the antecedents of corporate political connections and the contingency role of such connections. Little is found on the development of new measures of corporate political connections. Finally, it could be suggested that the interaction between political connections and the technological-based business innovation would be an interesting issue to study.

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Chinese firms’ political connection, ownership, and financing constraints

Cited by 153 publications

References 6 publications

Does a Board Chairman’s Political Connection Affect Green Investment?—From a Sustainable Perspective

Does a Board Chairman’s Political Connection Affect Green Investment?—From a Sustainable Perspective

Political Connections, Analyst Following, and the Informativeness of Insider Trading in China

A Recent Literature Review on Corporate Political Connections

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