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The contingent value of CEO political connections: A study on IPO performance in China

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  • Jianfeng Wu

    ()

  • Sali Li

    ()

  • Zijie Li

    ()

Abstract

This study investigates the effect of corporate political connections on IPO performance in an emerging economy. More specifically, it examines how CEO political connections affect the IPO performance of 428 firms in China from 2000 to 2004. The empirical results show that CEO political connections have a positive impact on firms’ ability to raise capital from public markets. The results also show that CEO political connections with the central government play a more important role in IPO performance than political connections with regional governments. In addition, the positive effect of central political connections on IPO performance is weaker in market-restricted regions but stronger in highly regulated industries. The findings highlight the contingent value of CEO political connections in an emerging economy. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Jianfeng Wu & Sali Li & Zijie Li, 2013. "The contingent value of CEO political connections: A study on IPO performance in China," Asia Pacific Journal of Management, Springer, vol. 30(4), pages 1087-1114, December.
  • Handle: RePEc:kap:asiapa:v:30:y:2013:i:4:p:1087-1114
    DOI: 10.1007/s10490-012-9300-1
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    References listed on IDEAS

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    Cited by:

    1. Ma, Liangbo & Ma, Shiguang & Tian, Gary, 2013. "Political connections, founder-managers, and their impact on tunneling in China's listed firms," Pacific-Basin Finance Journal, Elsevier, vol. 24(C), pages 312-339.
    2. Mike W. Peng & Sunny Li Sun & Lívia Markóczy, 2015. "Human Capital and CEO Compensation during Institutional Transitions," Journal of Management Studies, Wiley Blackwell, vol. 52(1), pages 117-147, January.
    3. repec:kap:asiapa:v:34:y:2017:i:3:d:10.1007_s10490-016-9499-3 is not listed on IDEAS
    4. Jing Zhang & Justin Tan & Poh Wong, 2015. "When does investment in political ties improve firm performance? The contingent effect of innovation activities," Asia Pacific Journal of Management, Springer, vol. 32(2), pages 363-387, June.
    5. Zhao, Hongxin & Lu, Jiangyong, 2016. "Contingent value of political capital in bank loan acquisition: Evidence from founder-controlled private enterprises in China," Journal of Business Venturing, Elsevier, vol. 31(2), pages 153-174.
    6. repec:eee:chieco:v:44:y:2017:i:c:p:48-66 is not listed on IDEAS
    7. repec:eee:respol:v:47:y:2018:i:1:p:108-120 is not listed on IDEAS
    8. repec:kap:asiapa:v:35:y:2018:i:2:d:10.1007_s10490-017-9560-x is not listed on IDEAS
    9. Liu, Qigui & Tang, Jinghua & Tian, Gary Gang, 2013. "Does political capital create value in the IPO market? Evidence from China," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 395-413.
    10. repec:kap:asiapa:v:35:y:2018:i:1:d:10.1007_s10490-016-9501-0 is not listed on IDEAS

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