Does Performance Matter? Evaluating Political Selection Along the Chinese Administrative Ladder

2017 ◽  
Vol 51 (8) ◽  
pp. 1074-1105 ◽  
Author(s):  
Pierre F. Landry ◽  
Xiaobo Lü ◽  
Haiyan Duan
Keyword(s):  
Economic Performance ◽  
Large Scale ◽  
Political Connections ◽  
Political Connection ◽  
Relative Importance ◽  
Heterogeneous Effects ◽  
Local Politicians ◽  
Political Selection ◽  
Ruling Elites ◽  
Government Executives

Political selection is central to the survival of all regimes. This article evaluates the relative importance of performance and political connection for the advancement of local politicians under authoritarianism. We hypothesize that in a large-scale multilevel polity, economic performance plays a greater role in promotion at lower administrative levels of government than at higher ones, even after controlling for political connections. This dualist strategy allows the ruling elites to achieve economic performance while minimizing the advancement of potentially disloyal challengers. Thus, balancing between loyalty and competence among subordinates enhances regime survival. Our empirical evidence draws on a comprehensive panel dataset of provincial, prefectural, and county-level Communist party secretaries and government executives appointed between 1999 and 2007. We find consistent evidence for our argument under various model specifications. We also explore the heterogeneous effects of performance on promotion given the Chinese Communist Party’s (CCP) age ineligibility rule for cadre promotion and jurisdiction characteristics.

scholarly journals Investment Bank Reputation and IPO Qualifications

2016 ◽  
Vol 12 (16) ◽  
pp. 54 ◽  
Author(s):  
Yubo Li
Keyword(s):  
Large Scale ◽  
High Growth ◽  
Low Risk ◽  
Investment Banks ◽  
Political Connections ◽  
Political Connection ◽  
Chinese Firms ◽  
Investment Bank ◽  
Screening Process ◽  
Regular Screening

This study examines the influence of investment bank’s reputation and political connection on the IPO qualification of Chinese firms. The results show that firms which are sponsored by prestigious investment banks are more likely to pass the regular screening process. Also, the investment bank’s political connections have no significant impact on the IPO qualification. Furthermore, we compared the various investment banks’ customer’s characteristic. Thus, the results show that the customers of prestigious investment banks have more large-scale, are high growth companies, and are more central enterprises. This indicates that high reputation investment banks tend to choose low risk and high growth prospective IPO companies in order to avoid damage to the reputation.

Do CEO Political Connections and Firm Social Responsibility Affect Debt Level?

2020 ◽  
Vol 2 (2) ◽  
pp. 17-34
Author(s):  
Mohamed Ali Azouzi
Keyword(s):  
Social Responsibility ◽  
Positive Relationship ◽  
Negative Relationship ◽  
Political Connections ◽  
Political Connection ◽  
External Funding ◽  
Debt Level ◽  
The Social ◽  
Corporate Social ◽  
Selection Of

The objective of this study was to describe the effect of CEO political connection and firm social responsibility on debt access. These constructions have been evaluated in Tunisian firms. The results showed the presence of a positive relationship between political connection, corporate social responsibility, and the debt level. The authors also verified the presence of a negative relationship between political connection and the social responsibility of Tunisian companies. This research has shown how political connection and social responsibility improve the image of the company and facilitate their access to external funding methods. Tunisian companies are advised to know the importance of political connection and social responsibility in the selection of their leaders.

Accounting conservatism, corporate governance and political connections

2017 ◽  
Vol 25 (2) ◽  
pp. 288-318 ◽  
Author(s):  
Nor Farizal Mohammed ◽  
Kamran Ahmed ◽  
Xu-Dong Ji
Keyword(s):  
Corporate Governance ◽  
Emerging Market ◽  
Political Influence ◽  
Ordinary Least Squares ◽  
Accounting Conservatism ◽  
Political Connections ◽  
Board Independence ◽  
Political Connection ◽  
Content Type ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between accounting conservatism, corporate governance and political connection in listed firms in Malaysia where political influence plays a significant role in the capital market and in many business dealings. Design/methodology/approach By utilizing 824 firm-year observations comprising large listed companies over a period of four years from 2004, this study uses ordinary least squares regression models to investigate the relationship between accounting conservatism, corporate governance and political connections in Malaysia. Multiple measures of conservatism developed by Basu (1997) and Khan and Watts (2009) are employed. Findings The results show evidence of accounting conservatism (bad news being recognized earlier than good news) in Malaysia. Further, the results reveal that better corporate governance structure in terms of board independence is positively associated with accounting conservatism while management ownership is negatively associated with it. However, political connection has a negative moderating effect on the positive relationship between accounting conservatism and board independence. The results also suggest political connections have a positive association with firm’s future performance. Originality/value This study is the first in investigating the effect of political connections on accounting conservatism in Malaysian context and how political connections negatively affect the monitoring role of the corporate boards. By directly measuring political connection and controlling for various corporate governance mechanisms and firm-specific attributes, this study contributes to enhance the authors’ understanding of the political influence in financial reporting quality and firm performance in an emerging market setting.

Corporate political connections, agency costs and audit quality

2016 ◽  
Vol 24 (4) ◽  
pp. 357-374 ◽  
Author(s):  
Arifur Khan ◽  
Dessalegn Getie Mihret ◽  
Mohammad Badrul Muttakin
Keyword(s):  
Agency Costs ◽  
Audit Quality ◽  
Agency Cost ◽  
Political Connections ◽  
Political Connection ◽  
Data Set ◽  
Research Attention ◽  
Content Type ◽  
Big 4 ◽  
The Relationship

Purpose The effect of political connections of agency costs has attracted considerable research attention due to the increasing recognition of the fact that political connection influences corporate decisions and outcomes. This paper aims to explore the association between corporate political connections and agency cost and examine whether audit quality moderates this association. Design/methodology/approach A data set of Bangladeshi listed non-financial companies is used. A usable sample of 968 firm-year observations was drawn for the period from 2005 to 2013. Asset utilisation ratio, the interaction of Tobin’s Q and free cash flow and expense ratio are used as alternative proxies for agency costs; membership to Big 4 audit firms or local associates of Big 4 firms is used as a proxy for audit quality. Findings Results show that politically connected firms exhibit higher agency costs than their unconnected counterparts, and audit quality moderates the relationship between political connection and agency costs. The results of this paper suggest the importance of audit quality to mitigate agency problem in an emerging economic setting. Research limitations/implications The findings of this paper could be of interest to regulators wishing to focus regulatory effort on significant issues influencing stock market efficiency. The findings could also inform auditors in directing audit effort through a more complete assessment of risk and determining reasonable levels of audit fees. Finally, results could inform financial statement users to direct investments to firms with lower agency costs. Originality/value To the knowledge of the authors, this study is one of the first to explore the relationship between political connection and agency costs, and the moderating effect of audit quality of this relationship.

scholarly journals Too much reciprocity?

2020 ◽  
Vol 14 (2) ◽  
pp. 473-491
Author(s):  
Zhe Sun ◽  
Qi Ai
Keyword(s):  
Social Exchange ◽  
Social Exchange Theory ◽  
Emerging Market ◽  
Chief Executive ◽  
Political Connections ◽  
Political Connection ◽  
Content Type ◽  
Chinese Multinationals ◽  
The Government ◽  
The Impact

Purpose Using the evidence of Chinese outbound mergers and acquisitions (M&As) enacted between 2006 and 2014, this study aims to investigate the role played by home political connections on the cost implications of Chinese multinationals. It also examines whether home political connections – at different levels and of different configurations – impact the operational cost of Chinese multinationals. Design/methodology/approach The data were analysed using a multivariate regression model. To examine their heterogeneous effect on Chinese multinationals, the political connection data were further split into higher and lower level political connections and in chief executive officer (CEO) and chairperson political connections. Findings This study implies the negative effect of home political connections on the internationalisation of Chinese multinationals. At the same time, the impact of lower-level political connections is stronger than that of their higher-level counterparts. Moreover, CEO political connections have a stronger effect on the operational costs of Chinese multinationals than their Chairperson equivalents. Originality/value By unravelling the “black box” of Chinese internationalisation from the social exchange perspective, through the informal political connection networking ties between Chinese firms and the government, this study advances emerging market multinational theory, contributes to the understanding of the heterogeneous nature of political connections and sheds new light on social exchange theory from the perspective of the emerging phenomenon of Chinese internationalisation.

scholarly journals POLITICAL CONNECTION, FAMILY OWNERSHIP, AND EARNINGS MANAGEMENT IN MANUFACTURING COMPANIES IN INDONESIA

2021 ◽  
Vol 19 (3) ◽  
pp. 585-593
Author(s):  
Enni Savitri ◽  
Keyword(s):  
Earnings Management ◽  
Management Practices ◽  
Stock Exchange ◽  
Political Connections ◽  
Family Ownership ◽  
Political Connection ◽  
Manufacturing Companies ◽  
Control Rights ◽  
Political Relationship ◽  
The Government

Political connections have an essential role in the earnings management strategy. Political connections can influence earnings management practices. The research aimed to analyze the effect of politics and family ownership on earnings management practices. The sample is 92 manufacturing companies listed on the Indonesia Stock Exchange for the period 2016-2019. Methods of data using a purposive sampling method. Multiple linear regression is an analytical tool used to test the hypothesis. The results show that political connections influence profits. The company pays more attention to the company’s reputation and maintains the privileges of the political relationship that has existed between the company and the government. Family ownership affects earnings management. Family ownership has control rights that can be used to influence management in company profits. The novelty of this research is that political connections can influence earnings management.

scholarly journals The effect of related party transactions on firm performance: the moderating role of political connection in indonesian banking

2019 ◽  
Vol 20 ◽  
pp. 81-92 ◽  
Author(s):  
Mr Supatmi ◽  
T. Sutrisno ◽  
Erwin Saraswati ◽  
Bambang Purnomosidhi
Keyword(s):  
Panel Data ◽  
Stock Exchange ◽  
Market Performance ◽  
Political Connections ◽  
Political Connection ◽  
Limited Information ◽  
Related Party Transactions ◽  
Macroeconomic Conditions ◽  
Panel Data Regression ◽  
Data Regression

This study aims to examine the effect of related party transactions (RPTs) on banks’ performance and investigates political connections as moderator in their causal relationship. Our sample is 40 Indonesian banks listed on the Indonesian Stock Exchange for the years 2013–2016 with 160 observations as panel data. Based on panel data regression test, our results demonstrate that account receivables-related RPTs have a positive effect on banks’ profitability and its market performance (Tobin’s Q), but there are consequences of high operating costs and the risk of non-performing loans. Banks receive more funds from their related parties (account payables-related RPTs), banks exhibit higher capital capability and lower market performance. Further, the political connection index in banks significantly affect banks’ capability, liquidity, efficiency, and market value through RPTs. This result indicates that political connection strengthens the effects of RPTs on banks’ performance. Although this study has limited information in determining political connections and has not considered macroeconomic conditions, these findings imply that political connection plays an important role in banks’ performance in Indonesia.

Election by Community Consensus: Effects on Political Selection and Governance

2020 ◽  
pp. 1-45
Author(s):  
Ashna Arora
Keyword(s):  
Secret Ballot ◽  
Village Level ◽  
Local Elite ◽  
Qualitative Evidence ◽  
Level Data ◽  
Local Politicians ◽  
Political Selection ◽  
Selection Of

This paper evaluates the effects of encouraging the selection of local politicians in India via community consensus, as opposed to a secret ballot election. Using village-level data on candidates, elected politicians, government budgets, and workfare employment, I show that incentives for consensus elections lead to politicians that are more educated but less likely to be drawn from historically marginalized castes, and increase how regressively workfare employment is targeted. These results are supported by qualitative evidence that shows that consensus elections are prone to capture by the local elite, which may reduce the need for clientelistic transfers to the non-elite.

scholarly journals Pengaruh Koneksi Politik terhadap Nilai Perusahaan

2020 ◽  
Vol 30 (6) ◽  
pp. 1550
Author(s):  
Winny Evalestine Patriarini
Keyword(s):  
Regression Analysis ◽  
Multiple Regression Analysis ◽  
Multiple Regression ◽  
Firm Value ◽  
Stock Exchange ◽  
Political Connections ◽  
The Political ◽  
Political Connection ◽  
Analysis Model ◽  
A Company

The purpose of this study is to analyze the effect of political connection on firm value. This study uses 160 samples listed on the Indonesia Stock Exchange for the period 2014 to 2018. The analysis used in this study is the Multiple Regression analysis model that is processed with SPSS 20 software. This study found that political connections had a positive and significant effect on firm value. The results show that the political connections that a company has can cause a company to have an advantage so that it can increase the value of the company. Keywords: Political Connection; Firm Value.

Innovation and Exports of Korean Firms: How Do They Differ by Size and Industry?

2019 ◽  
Vol 10 (3) ◽  
pp. 249-271
Author(s):  
Wonkyu Shin ◽  
Sehwan Oh ◽  
Sungho Rho
Keyword(s):  
Global Economy ◽  
Large Scale ◽  
Small And Medium Enterprises ◽  
Market Competition ◽  
Information And Communications Technology ◽  
Firm Level ◽  
Innovation Activities ◽  
Heterogeneous Effects ◽  
Ict Industry ◽  
Medium Enterprises

This article examines some of the distinctive characteristics of South Korean firms in relation to their research and development (R&D) and export activities affecting the efforts to retain intellectual property rights (IPR). In particular, this study shows how firms of different sizes (small and medium enterprises: SMEs vs. large-scale enterprises: LEs) tend to hold the ownership of IPR differently. To test the heterogeneous effects of the firms’ innovative capacity, this study utilizes the firm level data of 6,138 Korean firms during 2006–2014. In the years 2006–2014, South Korea concluded free trade agreements (FTAs) with numerous economies and accelerated its market competition and integration into the global economy. Our empirical results found that R&D activities of both SMEs and LEs were active during the period; however, SMEs in particular took a great stride in their patenting and innovation activities. Findings of our article also show that the more companies engaged in export activities, the more actively patents grew. Furthermore, the companies in the information and communications technology (ICT) industry are more aggressive in patenting activities.

Sign in / Sign up

Export Citation Format

Share Document