Political connections and investment efficiency of renewable energy enterprises: The role of marketization

Mingming Zhang, Weijia Zheng and Chien-Chiang Lee ()

Energy Economics, 2024, vol. 139, issue C

Abstract: Using data from 77 listed renewable energy enterprises in China and the threshold effect model, this study investigates the impact of political connections on the investment efficiencies of renewable energy enterprises at different degrees of marketization. A Richardson residual measurement model is applied to measure this efficiency. Further, this study constructs a cash flow sensitivity model to analyze how the political connections affect investment efficiency through financing factors and then analyzes the four external financing channels using a path analysis. The results show that when the degree of marketization is less than 9.280, political connections can improve investment efficiency. When the degree of marketization exceeds 9.280, the influence of political connections on investment efficiency is statistically insignificant. At a low marketization stage, political connections enhance the ability of enterprises to acquire resources through four kinds of external financing channels: bank credit, corporate bonds, commercial credit, and equity financing. This supports investment efficiency by reducing cash flow sensitivity. Due to the differences in the nature of the enterprises and personnel appointments, non-state-owned renewable energy enterprises with political connections experience more significant differences with respect to the impact on investment efficiency under different marketization levels.

Keywords: Political connections; Investment efficiency; Degree of marketization; Financing (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988324006261
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:139:y:2024:i:c:s0140988324006261

DOI: 10.1016/j.eneco.2024.107918

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().