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Executive political connections and firm performance: Comparative evidence from privately-controlled and state-owned enterprises

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  • Ding, Shujun
  • Jia, Chunxin
  • Wu, Zhenyu
  • Zhang, Xiaoqing

Abstract

This study examines the effects of ultimate control and the political connections of top executives on firm's performance and the monitoring role played by boards of directors. It investigates whether the political influence of ownership and that of management are complements or substitutes in their effects on board independence and accounting performance. The findings indicate that the state holding in SOEs (state-owned enterprises) weakens board independence, but improves accounting performance. The positive effect of a board chair's political connections on firm-level performance is only documented in SOEs.

Suggested Citation

  • Ding, Shujun & Jia, Chunxin & Wu, Zhenyu & Zhang, Xiaoqing, 2014. "Executive political connections and firm performance: Comparative evidence from privately-controlled and state-owned enterprises," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 153-167.
    • Handle: RePEc:eee:finana:v:36:y:2014:i:c:p:153-167
    DOI: 10.1016/j.irfa.2013.12.006
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    More about this item

    Keywords

    Political connections; Performance; Ultimate control; Privately-controlled enterprises;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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