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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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    Cited by:

    1. Wang, Delu & Ma, Gang & Song, Xuefeng & Liu, Yun, 2016. "Political connection and business transformation in family firms: Evidence from China," Journal of Family Business Strategy, Elsevier, vol. 7(2), pages 117-130.
    2. repec:eee:accoun:v:53:y:2018:i:4:p:255-273 is not listed on IDEAS
    3. repec:eee:ecosys:v:41:y:2017:i:2:p:179-202 is not listed on IDEAS
    4. repec:eee:enepol:v:123:y:2018:i:c:p:349-359 is not listed on IDEAS
    5. repec:eee:pacfin:v:51:y:2018:i:c:p:297-317 is not listed on IDEAS
    6. Tan, Youchao & Zhu, Zhenmei & Zeng, Cheng & Gao, Minghua, 2014. "Does external finance pressure affect corporate disclosure of Chinese non-state-owned enterprises?," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 212-222.
    7. Shujun Ding & Chunxin Jia & Craig Wilson & Zhenyu Wu, 2015. "Political connections and agency conflicts: the roles of owner and manager political influence on executive compensation," Review of Quantitative Finance and Accounting, Springer, vol. 45(2), pages 407-434, August.
    8. repec:bec:imsber:v:9:y:2017:i:1:p:157-179 is not listed on IDEAS
    9. repec:eee:riibaf:v:47:y:2019:i:c:p:162-173 is not listed on IDEAS
    10. Al-Hadi, Ahmed & Taylor, Grantley & Al-Yahyaee, Khamis Hamed, 2016. "Ruling Family Political Connections and Risk Reporting: Evidence from the GCC," The International Journal of Accounting, Elsevier, vol. 51(4), pages 504-524.

    More about this item

    Keywords

    Political connections; Performance; Ultimate control; Privately-controlled enterprises;

    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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