Political involvement and firm performance — Chinese setting and cross-country evidence

Hong Guo, Wanli Li and Yuxiang Zhong

Journal of International Financial Markets, Institutions and Money, 2019, vol. 59, issue C, 218-231

Abstract: This paper examines the effect of political involvement on firm performance in Chinese and cross-country setting. We find that political involvement is negatively correlated with firm performance in China and the negative effect in China is stronger than that in other countries. Cross-sectional tests indicate that the negative effect is not affected by cross-listing, stronger in local Stated Owned enterprises (SOEs) and disappears after the issue of Guiding opinions and Several opinions. Our additional analyses show that the degree of overlapping between members of the Party Committee and directors has a converted U-shape relationship with firm performance. The ratio of Chinese Communist Party members in the board of directors has positive impact on firm performance and political involvement is positively correlated with firm performance in NSOEs.

Keywords: Political involvement; Party committee; Firm performance (search for similar items in EconPapers)
JEL-codes: G15 G18 G28 G38 M41 M48 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:59:y:2019:i:c:p:218-231

DOI: 10.1016/j.intfin.2018.12.006

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