The Continuing Importance of Political Ties in China

Shi, Weichao; Markóczy, Ĺıvia; Stan, Ciprian

doi:10.5465/amp.2011.0153

Cited by 167 publications

(141 citation statements)

References 86 publications

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“…The mean value of ECERI is 0.4%, and its maximum value is only 6.6%, which indicates that most of China's listed manufacturing companies take only a small portion of their earnings to invest in green practices. Additionally, 31.5% of companies in our sample are hiring board chairmen with political connections, which is consistent with the findings from the Shi et al's (2014) argument that political connection is common among China's companies [17]. The mean value of no1share is 40.7% and its maximum value is as high as 74.3%.…”

Section: Regression Modelssupporting

confidence: 90%

“…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]. However, few studies test how political connections affect green investment.…”

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: Regression Modelssupporting

confidence: 90%

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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“…First, the government is a critical source of resources and legitimacy in China. Since governments at various levels still maintain the power to allocate key resources, issue licenses and permits (for business entry), ratify projects, grant subsidies, allow tax arrears, and provide access to infrastructure (Shi et al 2014), political connections with the government are of particular importance for business survival and success Zhang 2007, Peng andLuo 2000). Government control of resources also makes it possible for the government to co-opt businesses/elites by granting resources and legitimacy in exchange for conformity.…”

mentioning

confidence: 99%

Do Political Connections Buffer Firms from or Bind Firms to the Government? A Study of Corporate Charitable Donations of Chinese Firms

Zhang

Marquis

Qiao

2016

Organization Science

318

348

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D o political connections buffer firms from or bind firms to the government? To examine this theoretical puzzle, we distinguish two types of managerial political connections, ascribed and achieved, and theorize that these different types of ties either buffer firms from or bind firms to government demands. Furthermore, we propose that these effects are contingent on both industrial and regional institutional conditions. We test our framework with a unique panel data set of privately controlled listed firms' charitable donations in China from 2001 to 2012. We find that firms whose executives have ascribed bureaucratic connections are more likely to use their connections as a buffer from governmental donation pressure, particularly in competitive industries and less market-oriented regions, whereas in state-monopolized industries this buffering effect is reduced. In contrast, achieved political connections are more likely to serve a binding function that facilitates donation, particularly in state-monopolized industries and more market-oriented regions, but in less marketoriented regions, they buffer firms from the pressure to donate. Our research contributes to the literatures on the effects of political connections, the institutional contingencies of political connections, and the relationship between corporate social responsibility (CSR) and corporate political activities (CPA).Keywords: political connections; corporate charitable donation; resource dependence; institutional environment History: Published online in Articles in Advance September 29, 2016. IntroductionAs institutional linkages that span firms and governmental authorities, firms' political connections are a key component of corporate political strategy in both developed and emerging economies (Hillman 2005, Hillman et al. 1999, Peng and Luo 2000. However, the effects of political connections on firm behavior and outcomes are not clear (Sun et al. 2012). Many studies focus on the benefits from such linkages and indicate that political connections have a "buffering" effect; that is, they provide a buffer for the organization from competitive and regulatory forces via access to information, influence, and legitimacy (Hillman 2005, Hillman et al. 1999, Lester et al. 2008, Peng and Luo 2000. Research has shown that firms can employ their political capital to shield themselves from unwanted political interference, unfavorable regulations, and/or various forms of government rent expropriation (Mellahi et al. 2016). Even in the United States, political connections have been shown to help firms when they deal with regulators (Correia 2014, Yu andYu 2011). In emerging markets, such a buffering effect is seen as an effective mechanism to protect firms from government rent-seeking behavior (Chen et al. 2011, Dieleman andBoddewyn 2012).In contrast, other studies consider these connections from the perspective of the government and emphasize the necessary costs of such linkages for the firm. From this perspective, political connections have a "binding" effect, ...

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“…A major difference between U.S. and Chinese political connections is that in the U.S., former government officials may be hired by private-sector firms but in China, government officials are often appointed to a leadership position in a state-owned enterprise (Shi, Markóczy, and Stan, 2014). This difference between hiring and appointing top managers carries over into expectations for future gain.…”

Section: Us Investor Perceptions Of Ceo Political Connections With mentioning

confidence: 99%

How Ideologies Influence the Legitimacy of State Involvement in Corporate Governance

Shao

2016

AMPROC

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The Continuing Importance of Political Ties in China

Cited by 167 publications

References 86 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

Do Political Connections Buffer Firms from or Bind Firms to the Government? A Study of Corporate Charitable Donations of Chinese Firms

How Ideologies Influence the Legitimacy of State Involvement in Corporate Governance

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