It's Not Just a Visit: Receiving Government Officials’ Visits and Firm Performance in China

Li, Weiwen; Tsang, Eric W. K.; Luo, Danglun; Qin, Ying

doi:10.1017/mor.2015.45

Cited by 21 publications

(11 citation statements)

References 87 publications

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“…Following Li et al (), we choose capital city as a dummy instrumental variable. It equals 1 if the firm headquarters are in the capital city of a province and is 0 otherwise.…”

Section: Resultsmentioning

confidence: 99%

“…Unlike previous studies, we distinguish the strength of political access by measuring the number of official visits to firms. Official visits strengthen the interactions between executives and politicians (Li et al, ; Schuler et al, ). Managers deliberately allocate cash for philanthropic giving to forge ties with local officials; public knowledge of the official visits increases these allocations.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

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Indirect Reciprocity and Corporate Philanthropic Giving: How Visiting Officials Influence Investment in Privately Owned Chinese Firms

Xiang

Zhang

2018

J Management Studies

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This study examines how privately owned firms that are listed on Chinese stock exchanges and often surrounded by Buddhist or Taoist temples use money to bind themselves to officials who can mitigate their underinvestment problems. Philanthropic giving is a traditional way of achieving this task. Based on social‐exchange theory, we consider the potential for indirect reciprocity, in which visiting officials do favours for local businesses that do favours for other social actors. We analyse whether China’s Buddhist and Taoist cultures influence how philanthropic giving induces visiting officials to do favors. We also examine temple locations and the behaviours of privately owned firms listed on Chinese stock exchanges from 2001 to 2012 in an empirical study that provides strong support for our arguments. Results show that philanthropic giving initiates and amplifies indirect reciprocity between visiting officials and local businesses, thereby increasing corporate investment. The magnitudes of these effects depend on the magnitude of religious norms. Our study thus illuminates the influence of visiting officials on corporate investment.

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“…Following Li et al (), we choose capital city as a dummy instrumental variable. It equals 1 if the firm headquarters are in the capital city of a province and is 0 otherwise.…”

Section: Resultsmentioning

confidence: 99%

Section: Theoretical Backgroundmentioning

confidence: 99%

Indirect Reciprocity and Corporate Philanthropic Giving: How Visiting Officials Influence Investment in Privately Owned Chinese Firms

Xiang

Zhang

2018

J Management Studies

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“…Wong (2010) uses firms' data from Hong Kong to show that PCFs enjoy enhanced accounting and market performance. Li et al (2016) and Wang et al (2019), using government officials' corporate site visits to measure political connections, empirically document that Chinese firms that received officials' visits obtain more new investment projects and bank loans, which could ultimately improve their performance. Niessen and Ruenzi (2010) examine the effect of political connections on performance of German firms.…”

Section: Risk Committee Political Connection and Corporate Financial Performancementioning

confidence: 99%

“…Su and Fung (2013) argue that cultivating political connections help firms to increase their sales and to incur lower operation and financing cost, which may reflect favourably on the firms' performance. A review of literature indicates that politically connected firms (PCFs) experience high financial performance (Niessen and Ruenzi, 2010;Wu et al, 2012;Ding et al, 2014;Zhang et al, 2014;Li et al, 2016;Wang et al, 2019). In line with this argument, one may expect that an RC as a channel to improve a firm performance may be diluted in the presence of political ties and, thus, the RC-performance association is weakened for PCFs.…”

Section: Introductionmentioning

confidence: 99%

The impact of political connection and risk committee on corporate financial performance: evidence from financial firms in Malaysia

Al‐Dhamari

Nor

Boudiab

et al. 2020

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Purpose This study aims to examine the association between the effectiveness of risk committee (RC) and firms’ performance in Malaysian context. It also explores whether political connection has an impact on the relationship. Design/methodology/approach This study, using a principle components analysis, derives a factor score for RC attributes to proxy the effectiveness of RC. It also uses both accounting and market performance to measure the company performance. Findings Using a sample of financial firms from 2004 to 2018, this study finds that both accounting and market performance are higher for firms with an effective RC. It also finds that the effectiveness of RC in monitoring and management of risks is more pronounced for politically connected firms (PCFs). In further tests, the paper finds that RC attributes (i.e. RC independence, qualification and gender) are positively and significantly associated with accounting performance, while those of RC existence and overlap are positively and significantly related to market performance. The study also finds that RC size (RC diligence) has a positive (negative) impact on financial firms accounting and market performance. The further analysis also shows that PCFs with a separate as well as larger RCs experience both higher accounting and market performance. This study’s results are robust for concerns of endogeneity. Practical implications The findings of this study resolve the ongoing debates surrounding political connection by suggesting financial firms not to have politically connected board members as doing so may deteriorate their performance. This study’s results are also useful for investors, regulators and policymakers. Originality/value To the best of the authors’ knowledge, this study, for the first time, introduces on the interaction term between the effectiveness of RCs and political connection to empirically explore how an effective RC may reduce the potential risk of political ties. As such, this study adds to the literature and sheds light on an aspect of risk (i.e. risk stems from establishing close link with the government) that is growing in importance.

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“…Several factors, such as inconsistent law enforcement and corruption among public officials, are considered limiting factors of the political-legal environment. Firms can improve their performance if they receive government subsidies and facilities [2], without increasing transaction costs through political support [3], we can guarantee the legal protection of your investment, and keeping abreast of global business developments [4].…”

Section: Introductionmentioning

confidence: 99%

KPKU as a Tool for Measuring Company Performance, a Literature Review

Arifah¹,

Rahmawati²,

Probohudono³

et al. 2022

Advances in Economics, Business and Management Research

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The purpose of this study is to determine the development of research on the KPKU which has been used as a measuring tool in assessing the performance of SOEs. The KPKU referred to in this case is a performance assessment based on the Malcolm Baldrige criteria. The development of research on this performance assessment uses the connectedpapers.com application. The results of the screening obtained in the form of tables and images are then described according to the data obtained. This study shows that research using the KPKU as a public sector performance measured is still limited, especially research with objects in Indonesia, so that research on performance measure using the KPKU is still possible to be developed further. Suggestions for future research can further explore how the results of the performance assessment using the KPKU are and the differences in implementation in the public and private sectors. The implication of this research is that the performance measure using the KPKU still needs to be improved, because the results of the study illustrate that the KPKU has not been implemented comprehensively. The limitation of this research is that it has not been able to provide a detailed description of the variables that have developed along with the development of research related to the KPKU. The novelty of the research is that literature reviews using the connected paper application are still rarely carried out, where the results can provide an overview of research developments in a more interesting and understandable way.

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It's Not Just a Visit: Receiving Government Officials’ Visits and Firm Performance in China

Cited by 21 publications

References 87 publications

Indirect Reciprocity and Corporate Philanthropic Giving: How Visiting Officials Influence Investment in Privately Owned Chinese Firms

Indirect Reciprocity and Corporate Philanthropic Giving: How Visiting Officials Influence Investment in Privately Owned Chinese Firms

The impact of political connection and risk committee on corporate financial performance: evidence from financial firms in Malaysia

KPKU as a Tool for Measuring Company Performance, a Literature Review

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