Does political capital create value in the IPO market? Evidence from China

Liu, Qigui; Tang, Jinghua; Tian, Gary Gang

doi:10.1016/j.jcorpfin.2013.10.002

Cited by 174 publications

(76 citation statements)

References 40 publications

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“…They found that, compared with firms without political connection, politically-connected firms experience less financing constraints [19]. Liu et al (2013) examined the role of political connection in the Chinese IPO market and found a positive relationship between political connection and the possibility of IPO approval [15]. In addition to financial access, Houston et al (2014) explored how political connection affects the cost of bank loans and found that firms with political ties usually have lower bank loan costs [41].…”

Section: The Roles Of Political Connectionmentioning

confidence: 99%

“…However, these studies mainly focus on board structure or external governance mechanisms. There is a stream of research discussing the role of political connection in listed companies' operation decisions, such as tax payment [13], financing [14,15], and quality management activities [16]. A more recent study argues that political connections are also important parts of governance structures, and plays a key role in China [17].…”

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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“…We then went through each of these articles and dropped nonempirical articles as well as empirical studies that focused on IJVs, overseas Chinese firms (including those in Hong Kong, Macau, and Taiwan), or foreign direct investments in China. We also excluded empirical studies that are purely about the social ties and networks of top managers (e.g., Li, Yao, Sue-Chan, & Xi, 2011;Liu, Tang, & Tian, 2013;Peng & Luo, 2000) or top management team composition and processes (e.g., Chen, Liu, & Tjosvold, 2005;Qian, Cao, & Takeuchi, 2013). We included some of these studies in our review only if they address the principal-agent conflict or the principal-principal conflict caused by separation of ownership and control.…”

Section: Introductionmentioning

confidence: 99%

Empirical Research on Corporate Governance in China: A Review and New Directions for the Future

2015

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The ownership structure of Chinese firms has experienced significant changes over the last three decades, including the development of a fast growing stock market through which a large number of domestic firms have become publicly traded corporations. These changes have drawn increasing attention from researchers of corporate governance. In this article, we review the empirical research on corporate governance in China, with a focus on the internal and external governance mechanisms that have been investigated and the findings about the effectiveness of these mechanisms. On the basis of our review of 132 studies, we summarize the major findings and discuss the limitation of agency theory in understanding the governance issue in Chinese firms. We offer several ideas (e.g., the importance of the social context, new conceptualization of governance, different outcomes of governance, and data/method issues) for a new agenda to guide future research in the corporate governance of firms operating in the Chinese and other emerging economy contexts.

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“…Our choice of instrumental variable is the regional marketization index, which is highly correlated with the CCG Index, but is uncorrelated with firm performance. This index is provided by Fan et al and has been widely used as an instrumental variable in the literature [40][41][42].…”

Section: Corporate Governance and Firm Performancementioning

confidence: 99%

Does Corporate Governance Matter? Evidence from New Chinese Corporate Governance Disclosures

Zhang¹,

Dou²,

Gao³

et al. 2017

Int J Account Res

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IntroductionThis paper examines the association between corporate governance, financial distress risk, and firm financial and market performance by using the Corporate Governance in Finance (CGF) Index, which was developed for Chinese firms in 2013. The relationship between corporate governance and firm performance in developed markets such as the Unites States has been addressed in prior research, and the conclusions are mixed. For example, Gompers, Ishii, and Metrick find a positive link between an index of 24 corporate governance (G-Index) measures and abnormal returns during the 1991-1999 periods [1]. In contrast, Bebchuk, Cohen, and Wang report no association between the Harvard Law School's Entrenchment Index (E-Index) of six important corporate governance measures and abnormal market performance during the 2000-2008 period [2]. Bebchuk et al. (2013) argue that earlier associations between corporate governance and financial performance (1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999) disappeared after market participants (investors) started differentiating between firms with high and low corporate governance indices in later years (2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008). However, the link between corporate governance and firm performance in emerging markets such as China is not well-addressed, primarily because of the unavailability of a Chinese corporate governance index until very recently.Our paper lies at the intersection of two streams of research. The first stream of research is on the link between firm financial performance and corporate governance. This stream of research has used many proxies for corporate governance, including the G-index, size and composition of board of directors, existence and composition of audit committee, and extent of institutional ownership [2][3][4][5][6][7][8][9][10][11][12][13]. More recent work has emphasized the conditional nature of the association between financial performance and corporate governance and finds that the link has diminished in recent years [2]. The second stream of research examines corporate governance and its role in emerging markets such as China. This line of research suggests a different bundle of governance mechanisms for emerging markets due to their weak legal protection for shareholders and ineffective external governance mechanisms [14]. The financial scandal or even collapse of many famous firms in China has highlighted the importance of governance mechanisms in corporate finance [15].The theoretical intuition for our prediction of the link between the CGF index financial distress risk and firm performance is based on signaling theory and institutional settings in China as explained in details in section II. The signaling theory helps explain management incentives for reporting CGF governance measures as well as investors' reactions to the disclosure of the CGF index [16]. Motivated by prior studies and based on the theoretical intuition, our research questions include: (1) Is corporate governance effectiveness in the...

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Does political capital create value in the IPO market? Evidence from China

Cited by 174 publications

References 40 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

Empirical Research on Corporate Governance in China: A Review and New Directions for the Future

Does Corporate Governance Matter? Evidence from New Chinese Corporate Governance Disclosures

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