Corporate Public Transparency on Financial Performance: The Moderating Role of Political Embeddedness

Yuxuan Li, Xin Miao, Dequan Zheng and Yanhong Tang
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Yuxuan Li: School of Management, Harbin Institute of Technology, Harbin 150001, China
Xin Miao: School of Management, Harbin Institute of Technology, Harbin 150001, China
Dequan Zheng: School of Management, Harbin Institute of Technology, Harbin 150001, China
Yanhong Tang: School of Public Administration and Law, Northeast Agricultural University, Harbin 150030, China

Sustainability, 2019, vol. 11, issue 19, 1-17

Abstract: Corporate public transparency (CPT) is instrumental for companies to establish communications and trust with the public by disclosing and communicating information concerning corporate environmental and social impacts. However, it is still in dispute whether CPT can help promote corporate financial performance (CFP). This paper studied the moderating role of political embeddedness on the relationship between CPT and CFP. We investigate multiple hypotheses about the moderating roles of the political embeddedness including bureaucratic embeddedness (political connections of a chief executive officer (CEO) who was/is a government official or member of political council) and ownership embeddedness (i.e., state-owned enterprises (SOEs)). With the data of 195 observations from top 200 Chinese enterprises ranked by revenue for the years 2014~2016, the results show the following: (1) the relationship of CPT on CFP is moderated by government official and SOE ownership; (2) a negative moderating effect of government official; and (3) a negative moderating effect of SOE ownership. The research implications are further discussed. The findings of this study have practical implications for investors, stakeholders, and regulators.

Keywords: corporate public transparency (CPT); corporate financial performance (CFP); political embeddedness; bureaucratic embeddedness; ownership embeddedness; information disclosure; political context (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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