The impact of political connections on the efficiency of China's renewable energy firms

Mingshan Li, Xiaohua Sun, Yun Wang and Helen Song-Turner

Energy Economics, 2019, vol. 83, issue C, 467-474

Abstract: This study investigates the impact of political connections on firm efficiency as well as its mechanisms in Chinese renewable energy firms. The empirical results reveal a direct negative association between political connections and firm efficiency and an indirect correlation through political resources. The results indicate that the higher the level of political connections, the stronger the relationship between political connections and firm efficiency. Our findings also indicate that the impact of political connections is different between state-owned and non-state-owned firms. For state-owned firms, political connections are negatively correlated with firm efficiency and government subsidies are not beneficial for state-owned firms in promoting productivity. As for non-state-owned firms, there is a ‘double-edged sword’ effect of political connections on firm efficiency. On the one hand, political connections are associated with lower firm efficiency, but on the other hand, political connections can alleviate the adverse effects of financing constraints on non-state-owned firms.

Keywords: Renewable energy firms; Political connection; Political resources; Firm efficiency (search for similar items in EconPapers)
JEL-codes: D22 D24 H25 H32 O44 Q42 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:83:y:2019:i:c:p:467-474

DOI: 10.1016/j.eneco.2019.06.014

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