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Mixing business with politics: Political participation by entrepreneurs in China

Xunan Feng, Anders Johansson () and Tianyu Zhang

Journal of Banking & Finance, 2015, vol. 59, issue C, 220-235

Abstract: We study how Chinese private entrepreneurs benefit from participating in politics. Using original hand-collected data on listed firms controlled by private entrepreneurs, we document a significant positive relationship between political participation and subsequent change in firm performance. We also provide evidence that the change in social status cannot explain the change in performance. We then identify several ways through which firms gain preferential treatment when the controlling entrepreneur participates in politics: better access to debt financing, preferential tax treatment, more government subsidies, and superior access to regulated industries.

Keywords: Political participation; Entrepreneurs; Rent seeking; Debt financing; Tax burden; Government subsidies; China (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 H20 P26 (search for similar items in EconPapers)
Date: 2015
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Working Paper: Mixing Business with Politics: Political Participation by Entrepreneurs in China (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:59:y:2015:i:c:p:220-235

DOI: 10.1016/j.jbankfin.2015.06.009

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