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Economic policy uncertainty (EPU) may pose a risk or provide an opportunity for corporations. This study empirically investigates the impact of EPU on the corporate innovation of Chinese firms using patent information as a proxy for corporate innovation. The study then examines whether family ownership and political connections impede/boost corporate innovation. Using a longitudinal panel dataset of 3,085 Chinese firms listed during the period from 2009 to 2020, the study observes that EPU enhances corporate innovation in China. The study also finds that family firms negatively impact innovative projects during EPU. The study then shows that political connections positively moderate the effects of EPU on corporate innovation. The results of the study are robust to time and industry fixed effects, endogeneity issues, and firm-level time-varying factors. [ABSTRACT FROM AUTHOR]

In China, firms actively participate in poverty alleviation to comply with the national policy and to build political connections. Whether firms curry favor with the government by increasing spending on poverty alleviation is an interesting research question under the context of anti-corruption campaigns. Using hand-collected data from the period 2016–2018, we examine how anti-corruption campaigns have influenced corporate poverty alleviation spending at the city level. Our results show that anti-corruption campaigns are positively related to corporate poverty alleviation spending. We further identify two possible channels through which the anti-corruption campaign increases corporate poverty alleviation spending: (1) political connections and (2) stock price crash risk. Finally, we find that the effects of the anti-corruption campaign on corporate poverty alleviation spending are stronger in firms located in cities with lower degrees of marketization, a lower media index, and a higher poverty rate, as well as in firms receiving fewer government subsidies. [ABSTRACT FROM AUTHOR]

This paper examines whether state ownership and political connections affect the relationship between customer concentration and cash holdings for Chinese listed manufacturing firms. We show that non‐state‐owned firms, but not state‐owned firms, hold more cash as customer concentration increases. In addition, political connections weaken the positive effect of customer concentration on non‐state‐owned firms' cash holdings. Our supplemental analyses further show that for non‐state‐owned firms with limited access to finance—for instance, firms with low analyst following, low institutional ownership, or low government subsidies—the effects of political connections on weakening the positive association between customer concentration and cash holdings are more pronounced. Additional robustness tests support our arguments. [ABSTRACT FROM AUTHOR]

The graduate approach applied in China for the economic transition poses the risk of continued government influence on the market. The land reform and the following adjustment in China have introduced a seemingly complete market for residential land. However, a widely practiced coalition between the local developmental states and developers might impact residential land leasing in a more hidden way. Taking central Chengdu as the study area, this study takes the enterprise ownership and affiliations as two explanatory factors that impact the land leasing prices and builds an MGWR model to evaluate the premium of political connections for the developers to obtain the land. The result gives a clue to the local protectionism and preference for state-owned enterprises that might exist in land leasing in Chengdu. It is proved in this study that the average purchase price by state-owned enterprises is 8.9% lower than the prices that private enterprises could enjoy, and the average land leasing price by local enterprises is 14.2% lower than that enjoyed by non-local enterprises. The preceding conceptual and empirical discussion in this study advocates for a review and rethinking of the public sector's intervention in China's land market. In-depth analyses of the factors that define the land leasing behaviors of the local government are needed. [ABSTRACT FROM AUTHOR]

Securing long-term environmental pollution control in a system where local leaders in China hold tenure for only a short term is a challenge. The innovative Chinese accountability audit of natural resources (AANR) pilot project attempts to address this problem by mandating lifelong accountability for local leaders. Using this pilot as a quasi-natural experiment, we explored macro-effectiveness and micro-mechanisms of AANR. The results show that AANR has a positive impact on the environmental investment behaviour of enterprises. This paper finds that AANR stimulates enterprises' investments in the environment by improving the environmental behaviour of local leaders. During mobilisation meetings, local leaders convey signals on environmental matters. Political connections are bridges which convey the signals of mobilisation to enterprises. Those enterprises receive the signals and increase environmental investment. AANR thus promotes collaborative governance by ensuring that the interests of key stakeholders are aligned to prevent pollution. [ABSTRACT FROM AUTHOR]

This article empirically examines how political connections (PCs) affect a firm's media reaction after corporate fraud. Using data for Chinese listed companies from 2008 to 2021, we find that the media reports more positively for firms with PCs than for others that do not possess such advantages after the enforcement against fraud. The results are robust to a series of robustness checks and endogeneity corrections. When decomposing media reports, we find that PCs only facilitate positive media coverage but do not impede negative media coverage, which is more pronounced in state‐controlled media. This suggests that PCs protect firms' branding by facilitating positive media reports rather than withholding bad news. Moreover, we find this protective effect is more pronounced in firms with stronger PCs, weaker anti‐corruption regulation, lighter punishment for fraud, private ownership, and more donations. Further, the consequences analysis shows that this kind of protective effect significantly increases the probability of future fraud and stock price crashes. Our findings present a new perspective on the role of PCs and provide evidence for political bias in media coverage. [ABSTRACT FROM AUTHOR]

Why are perennially entrenched institutions so hard to reform? This article proposes a theory of institutional rebound based on China's reforms to break the three "iron-institutions" in state-owned enterprises (SOEs). I argue that reforms triggered the rise of informal institutions, which impeded further reforms and made old rules rebound. When SOE cadres had denser political connections, they actively manipulated the rules to maintain privileges. When managers and workers had fewer political resources, they used performative resistance to delay reforms and penalize reform advocates. The pressure to complete reforms drove cadres to first target the powerless, replacing them with cronies, before having to move to the more powerful. The article combines in-depth interviews, secondary sources, and topical modeling of newspaper and journal articles across three decades. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to investigate the effects of political connections on the association between firms' business strategy and their tax aggressiveness in an emerging economy such as China. The authors study a large sample of Chinese public firms from 2011 to 2017 using a panel regression model. In addition, a change analysis, an instrument variable test and alternative measures/samples are implemented as robustness tests. Firms adopting innovative business strategy are more tax aggressive overall. However, innovative firms with political connections are less tax aggressive compared to those without political connections. This paper contributes to the understanding of firms' tax behaviors in an emerging economy setting. It suggests that there are costs associated with political connections, such as foregone tax saving opportunities, which are understudies in the prior literature.

This study investigates whether political connections affect labor investment efficiency. We test this question in the context of China's private firms, where we find that political connections are negatively associated with labor investment efficiency. We also explore the channels through which political connections reduce labor investment efficiency and provide evidence that political connections aggravate both agency problems and information asymmetry. Further tests show that the influence of political connections is more pronounced for firms with overinvestment problems or high‐level political connections, and for firms from regions facing severe unemployment or loose anticorruption. Overall, our results are consistent with the "grabbing hand" argument that politicians destroy firm operational efficiency. [ABSTRACT FROM AUTHOR]

Political connections are the main social resource of a company. Internal control and digital transformation are different tools that increase the efficient distribution of resources. This study explores the relationship between executive political connections and financial performance. It also examines the function of internal control quality and digital transformation in terms of this relationship. We used data from Chinese A-share listed companies as a sample. The results suggest that having political connections can significantly improve financial performance and that the quality of internal control plays a partial mediating role in state-owned enterprises. Moreover, when digital transformation is taken as a moderating variable, the role of political connections or internal control in enterprise performance will be weakened. Enterprises should take full advantage of political connections and establish a high-quality internal control system. When enterprises do not have political connections, they can actively carry out digital transformation to change the situation. [ABSTRACT FROM AUTHOR]

This paper investigates the divergence in investor behaviour between the United States and China following the abolition of the Chinese presidential term limit in 2018, which may, in part, have reflected the heterogeneous opinions expressed in public online media regarding this event. Compared with Chinese investors, the sentiment among US investors was considerably more pessimistic. Accordingly, we find that Chinese companies listed in the United States significantly underperformed relative to a sample of propensity score‐matched firms listed in China. Additionally, we find that the political connectedness of firms to the Chinese government strongly influenced the stock prices of US‐listed Chinese firms. [ABSTRACT FROM AUTHOR]

This study examines the effects of shadow banking activities on the financial stability of the Chinese banking system. Moreover, it assesses whether the relation between financial stability and shadow banking activities changes for banks having political connections. The findings suggest a significant positive effect of shadow banking on the credit risk as well as the financial stability of Chinese banks. The growth of shadow banking activities has a significantly positive effect on Chinese commercial banks lowering the default risk and this relationship is incrementally significant for financial institutions having political connections. These findings are robust by controlling for various bank-specific and macroeconomic conditions. [ABSTRACT FROM AUTHOR]

This paper examines whether the massive Chinese anticorruption campaign ensnares corrupt firms, contains a political component, and reduces corporate corruption. Consistent with the campaign's stated objectives, investigated executives are more likely to come from Chinese firms with characteristics commonly associated with measures of poor governance, self-dealing, and inefficiencies. However, affiliations with prominent investigated political leaders increase investigation likelihood, while university affiliations with current central leadership decrease investigation likelihood, possibly indicating political partiality. Except for reported entertainment expenditures and chief executive officer pay, there has been little evidence of a substantial overall decrease in measures of potential corporate corruption. This paper was accepted by Tomasz Piskorski, finance. [ABSTRACT FROM AUTHOR]

We study the value of the political connections of directors on Chinese boards. We build a new dataset that measures connections of directors to members of the Politburo via past school ties, and find that private firms with politically connected directors in the boardroom get on average about 16% higher subsidies over sales per firm (7 million yuan). Connected state-owned enterprises (SOEs) access debt at 11% cheaper cost, which translates into average savings of close to 32 million yuan per firm in lower interest payments. We find that the value of the political connections persisted after the anti-corruption campaign (ACC) of 2012. It became weaker for the cost of debt in SOEs, but stronger for subsidies to private firms. We argue that the value of connections in the private sector increased after the ACC because they became a less risky alternative to corruption. We also show that connected firms do not perform better. [ABSTRACT FROM AUTHOR]

Political connections have been shown to be important for firms' survival and growth particularly in emerging economies, but our understanding of its determinants is rather limited. Drawing upon managerial power theory, we posit that executive power will be negatively associated with the percentage of politically connected independent directors (PCIDs) among all independent directors, and this effect will hold for independent directors with government background, but not for those with legislative background. In addition, we argue that state ownership will weaken the impact of executive power on the concentration of PCIDs. Using a sample of 2424 Chinese listed firms from 2004 to 2014 we find strong support for our hypotheses. Our study is the first to theoretically explain and empirically show that executive power will impact the formation of firms' political connections. [ABSTRACT FROM AUTHOR]

This study departs from existing work on board gender diversity (BGD) and corporate social responsibility (CSR) reporting by analyzing and explaining the mechanism by which gender-diverse boards in politically embedded firms (PEFs) affect firms' CSR reporting choices in a unique institutional setting of Chinese listed firms from 2010 to 2018. The following main results are obtained. First, having female directors and executives with political connections (PCs) on corporate boards improves the CSR reporting of firms. Firms with PCs have a greater possibility to issue CSR reports than their non-connected counterparts. Second, firms that have both gender diversity and PCs on their boards of directors are more likely to engage in CSR reporting. There is an indication that the presence of PCs on boards can strengthen the effect of female directors on firms' CSR reporting. Third, the presence of female directors on corporate boards has a stronger relationship with CSR reporting in PEFs than in non-PEFs. The study concludes that both BGD and PCs on corporate boards positively influence the diffusion of CSR-related practices in the Chinese business environment. [ABSTRACT FROM AUTHOR]

This study departs from existing work on board gender diversity (BGD) and corporate social responsibility (CSR) reporting by analyzing and explaining the mechanism by which gender-diverse boards in politically embedded firms (PEFs) affect firms’ CSR reporting choices in a unique institutional setting of Chinese listed firms from 2010 to 2018. The following main results are obtained. First, having female directors and executives with political connections (PCs) on corporate boards improves the CSR reporting of firms. Firms with PCs have a greater possibility to issue CSR reports than their non-connected counterparts. Second, firms that have both gender diversity and PCs on their boards of directors are more likely to engage in CSR reporting. There is an indication that the presence of PCs on boards can strengthen the effect of female directors on firms’ CSR reporting. Third, the presence of female directors on corporate boards has a stronger relationship with CSR reporting in PEFs than in non-PEFs. The study concludes that both BGD and PCs on corporate boards positively influence the diffusion of CSR-related practices in the Chinese business environment.

This paper examines whether and how executives' political connections affect their incentives to withhold bad news, measured by the stock price crash risk. We find that political connections are negatively associated with the stock price crash risk. Moreover, we show that political connections reduce firms' financial constraints and encourage firms to disclose more bad news to compete for government subsidies, which lowers managers' incentives to hide bad news. We also find that the negative relationship between political connections and crash risk varies with external institutions. Our results are robust to numerous robustness tests. [ABSTRACT FROM AUTHOR]

Research question/issue: Previous studies have documented the benefits for firms of building political connections, yet there is a gap in the literature on the information transmission effect of political connections. Our study examines the effect of political connections in a highly asymmetric information environment—private firms in China. Research findings/insights: Using quarterly data on listed private firms in China from 2004 to 2017, we find that political connections ensure such firms have access to reliable political information, which mitigates the risks of policy uncertainty. Further, firms connected to the government are better able to mitigate the negative effects of policy uncertainty than those connected to the legislature, while firms tied to high‐level authorities are better able to do so than those tied to lower‐level ones. Specifically, political connections are more effective in lower‐marketized and peripheral regions, where information asymmetry is higher. Theoretical/academic implications: Our study highlights the importance of political connections in mitigating the negative relationship between policy uncertainty and corporate investment via the information transmission channel. Specifically, officials can more efficiently mitigate policy uncertainty than delegates, and high‐level authorities are more effective than lower‐level officials. Practitioner/policy implications: We argue that building political connections helps private firms offset the negative effects of policy uncertainty. Our findings provide useful insights for understanding the impacts of Regulation No. 18 of October 2013, which limits the employment of current and retired officials in private firms. [ABSTRACT FROM AUTHOR]

This study empirically investigates the role of political connections in corporate environmental spending. It employs a sample of listed Chinese firms from polluting industries within the 2010–2013 period. Our empirical results show that having politicians as directors reduces the magnitude of discharge fees. We also find that such reductions are more pronounced in firms with a higher ratio of politically connected directors (i.e., listed Chinese polluting firms that are privately controlled). This negative relationship is robust to various model specifications (e.g., a sample of polluting firms after addressing the sample selection bias and reverse causality without an increase in new investment). Moreover, we observe that the negative relationship between political connections and discharge fees is stronger in listed Chinese polluting firms located in more polluted regions. Meanwhile, a polluting firm's incentive to engage in environmental protection, measured by firm‐level environmental awards (incidents), alleviates (exacerbates) the negative relationship. Finally, the impact of politically connected directors on discharge levies is explicitly driven by having local officials and officials from the home province as directors. [ABSTRACT FROM AUTHOR]

Using data from a large household survey among 8,438 households in China in 2011, we analyse whether the fact that a household head is a member of a political party in China increases the probability that the household has access to a bank loan. We investigate how these connections influence the decision of households to apply for a bank loan (i.e., the demand side) and the decision of the bank to approve the loan (i.e., the supply side). We show that political connections are positively associated with both the households' willingness to apply for a loan, as well as with the probability that they get a loan from the bank. We make two contributions to the literature on the determinants of households' access to credit. We are the first to analyse the role of political connections as a determinant of households' access to bank loans. Second, we analyse the role of political connections throughout the process of allocating bank loans, i.e., we decompose the loan application process into the households' self-selection process and bank's selection process. [ABSTRACT FROM AUTHOR]

This paper examines the relationship among political connections, information asymmetry and financing decisions. We use a sample of Chinese listed companies from 2008 to 2013. The results indicate that firms with political connections have lower leverage, which is contradictory to existing literature. However, we show a moderating effect on the negative relation between political connections and leverage after taking the level of information asymmetry into consideration, leading to an increase of leverage in politically-connected firms. Our results shed lights on the soft budget constraint and imply that information asymmetry plays a pivotal role in determining financing decisions in politicallyconnected firms. [ABSTRACT FROM AUTHOR]

This paper uses Chinese data to examine the link between political connections and pollution discharge by firms. Our empirical results show that political connections are the institutional means by which firms acquire strategic pollution discharge protection. This situation may lead to inadequate enforcement of pollution control regulations. Government officials who are young, of low education, promoted locally, and in office for a relatively long time are more likely to build political connections with polluters. We find that the pollution discharge of politically connected firms also varies considerably due to firm heterogeneity. This study also shows that pollution protection effects caused by political connections are more evident in the Central and Western regions, and capital-intensive industries. [ABSTRACT FROM AUTHOR]

Utilizing a large dataset on Chinese A-Share listed firms comprising 18763 firm-year observation for the period of 2001–2015, we examined whether Confucianism and political connections lessen the stock price crash risk of firms by using geographical-proximity-based Confucianism variables. Our findings point towards the evidence that firms situated in China with higher levels of Confucianism reveal low levels of stock price crash risk and this relationship is incrementally significant for politically connected firms while controlling for a battery of control variables. Our results are robust by using alternate proxies. [ABSTRACT FROM AUTHOR]

Industrial policy, particularly through the provision of large-scale assistance to industry in the form of 'tax holidays' and subsidies to firms, is very important in China. A major contribution of this paper is to introduce firm-level measures of assistance directly into industry-level production functions determining firm output using Chinese firm-level panel data for 1998–2007 and analysing the impact of government assistance on TFP at the firm-level. Our results indicate inverted U-shaped gains from assistance: across the 26 industries considered, firms receiving assistance rates of 1–10, 10–19, 20–49 and 50+% experienced on average 4.5, 9.4, 9.2 and −3% gains in TFP level, respectively. We then decompose the growth of TFP and relate it to assistance and formal political connections between firms and the government. We find in general firms receiving assistance contributed relatively more to TFP growth than non-assisted firms. However, this was largely through new firms being 'encouraged' to start-up rather than through firms open throughout 1998 to 2007 improving. There is also evidence that closure rates were truncated as a result of assistance. Moreover, the better results for assisted firms was very much 'driven' by a sub-group that received assistance but had no formal political connections and were not State-owned. [ABSTRACT FROM AUTHOR]

In this paper, we examine government influence on the acquisition behavior of Chinese firms. Drawing from the state capitalism literature, we test hypotheses regarding the effect of provincial government ownership and managerial ties respectively on industry relatedness of firm acquisitions. We furthermore test hypotheses concerning the moderating effect of institutional development and governor age and tenure. We test our hypotheses based on analysis of 346 majority acquisition deals completed by first-time acquirers in China between 2002 and 2014. Our results show that provincial government-owned firms and firms with ties to the same are more likely to conduct unrelated acquisitions within their home province compared to acquisitions across provincial boundaries. Similar patterns do not exist for privately owned firms or for firms with no managerial ties to provincial governments. Institutional development and governor age and tenure are found to have no moderating effects. We relate our findings to the main theoretical views of state capitalism and suggest that our results reflect government attempts to promote economic growth and social development. Our study contributes to the understanding of Chinese state capitalism and the cross-province barriers for business in China. [ABSTRACT FROM AUTHOR]

A firm's top manager and a government official may be connected due to special circumstances. This social relationship or political connection may provide industrial polluters with protection or a "pollution shelter" which could lead to severe environmental deterioration. This paper aims to examine the link between political connections and firms' pollution discharges by using Chinese data. Empirical results show that political connections are the institutional origin for firms to adopt strategic pollution discharges. Government officials who are young, of low education, promoted locally and in office for a relatively long time are more likely to build political connections with polluters. This phenomenon results in inadequate enforcement of regulation and emission control. The pollution discharges of politically connected firms also vary considerably due to firm heterogeneity. This study also shows that pollution shelter effects caused by political connections are more obvious in the central and western regions, prefecture cities and capital-intensive industries. [ABSTRACT FROM AUTHOR]

This paper examines how firm characteristics and local anti‐corruption effort moderate the influence of political connections on enterprises' private R&D investment using data from 2,587 Chinese A‐share listed enterprises. Our results show that the local anti‐corruption institutional environment significantly moderates the strong relationship between political connections and enterprises' private R&D investment. Firm characteristics (i.e., firm size and firm age) also show a moderating effect on the relationship between political connection and enterprises' private R&D investment; larger and older enterprises are more likely to have innovative resources and business cooperation partners, and thus are able to reduce their degree of reliance on political connections and government funding. The results of our study suggest the importance of having a transparent and fair institutional environment for enterprise innovation activities. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between political connections and corporate borrowing behaviour using the listed real estate development firms in China from 2001 to 2014. Evidence from China is of particular importance due to China being the world’s largest emerging and transition economy. We find that the benefit of political connections is manifested in firms obtaining loans from state-controlled banks in the first instance, but that political influence diminishes over subsequent loan extensions. The performance based requirement prevents banks providing systemic favourable treatment to the connected real estate firms, especially after the Chinese banking system reform in 2006. The results provide fresh insight on the risks and benefits of political connections in the Chinese real estate market as it transitions from a centrally planned to a market based economy under on-going market oriented banking and political reforms. [ABSTRACT FROM AUTHOR]

In this study, we examined the role of guanxi as entrepreneurs' resource-obtaining mechanism in private sector firms, using a data-set of 184 publicly listed firms in China. We found that guanxi indeed played a positive role that helped private sector firms gain easier access to resources. We also found that guanxi exerted even a greater positive effect on private sector firms' resource obtaining compared to entrepreneurs' political participation, due to being the lifeblood of business conduct and social interaction in Chinese culture. [ABSTRACT FROM AUTHOR]

In our analysis of 5738 CEO turnover events among A-share listed companies in China over the period of 1993 to 2019, we find that CEO turnovers on average hurt companies' market performance with significant negative abnormal returns in the event window. We then group the companies into four types based on whether the outgoing and successor CEOs have political connections, and then calculate the abnormal returns in the event windows of CEO turnovers once announced. We find that companies generally enjoy positive abnormal returns if they replace politically non-connected CEOs with connected ones. Such a positive effect is more evident among non-state-owned enterprises (non-SOEs), companies with worse performance, and companies with higher financial constraints. However, abnormal returns derived from hiring politically connected successor CEOs turn to negative following China's massive anti-corruption campaign in 2012. Our findings provide direct estimations of the economic value of CEOs' political connections for A-share listed companies in China and reveal boundary conditions that moderate the influence of hiring politically connected CEOs. • CEO turnovers brings significantly negative abnormal returns to firms. • A company obtain positive CARS when the successor CEO with politically connections. • The effect is more evident for non-SOEs. • The effect turns to negative after the massive anti-corruption campaign launched in 2012 in China. [ABSTRACT FROM AUTHOR]

While privatization has attracted much more attention in the literature, one type of reverse privatization, a privately-controlled firm inviting government ownership as its minority shareholders, is neglected in the literature. Using large-scale census firm data from China, we investigate the determinants of this kind of reverse privatization and its impact on firm performance. We find that (1) the decision of reverse privatization by Chinese private firms is affected by local political risk, firm-level financial characteristics, and industry-level characteristics, (2) the reverse privatization significantly affects the firm’s performance, which is measured in different proxies but the effects are not consistent, and (3) moreover, we find that the benefit of reverse privatization decreases as government ownership increases. Our results suggest that the prevalence of reverse privatization in China is a political outcome, which is affected by the trade-off of political risk and political privilege. Our work suggests that political risk and political considerations are the main driving factors of privatization, or its opposite, reverse privatization. Reverse privatization, to some extent, is a rational choice in some transition economies. Our findings offer clear policy implications to the nationalization phenomenon taking place around the world recently. [ABSTRACT FROM AUTHOR]

It has been argued that the state sector is advancing at the cost of the private sector in China. To examine this issue, we conduct an empirical analysis in which we exploit the launch of a large stimulus programme in the autumn of 2008. We find that stateowned enterprises (SOEs) are better able to maintain their leverage levels and have better access to both short- and long-term debt compared with private firms after the introduction of the stimulus programme. We also find that preferential access to debt financing does not help SOEs improve their performance. Instead, SOEs perform significantly worse than private firms after the introduction of the stimulus programme. Moreover, political connections obtained through political participation help mitigate the discrimination that private firms face from Chinese banks and help improve firm performance. These results support the conjecture that China's state sector is advancing, with negative consequences for aggregate performance in the economy. [ABSTRACT FROM AUTHOR]

This article presents a large-scale, systematic study of politically connected firms in China. It was conducted by compiling a database of all the publicly traded firms in China in 1993, 2002 and 2012 that codes the biographies of hundreds of thousands of board members. I find that there has been a significant increase in the percentage of firms that are connected with the national government in the last 20 years. This casts doubt on a popular argument that businesses in China have primarily relied on “local protectionism.” I interpret this as a result of firms' need to connect with powerful and stable institutions. I test this by examining the impact of the fall of Chen Liangyu on firms in Shanghai. [ABSTRACT FROM PUBLISHER]

Purpose – The purpose of this paper is to link literature on China’s real estate sector and the impact of governance, ownership and political connectedness on firm financial performance. Whether these factors impact listed real estate firms differently to firms in other industry sectors is identified. Design/methodology/approach – The paper uses pooled 2008-2013 data on A-share firms. Tobin’s Q captures firm financial performance. Explanatory variables include corporate governance, ownership, local government political connectedness, accounting data and ultimate control. Two-way interactions are estimated between real estate and ownership, governance, political connectedness and other variables. Three-way interactions are estimated between real estate, ownership, control and political connectedness. Year and industry fixed effects are absorbed. Findings – Industry concentration and proportion of state ownership appear to positively impact performance. Firm size, gearing and greater foreign ownership appear to negatively impact performance. However, differences are identified for real estate firms, in which state control and gearing positively impact performance. Greater state and foreign ownership as well as supervisory board size negatively impact performance. Finally, state control in the presence of local government connections negatively impacts performance, while greater state ownership in the presence of local government connections positively impacts performance. Originality/value – A lack of empirical evidence on the impact of corporate governance, ownership structures and political connectedness on firm performance in China’s real estate sector is addressed. Importantly, relationships among these factors and the financial performance of China’s listed real estate firms differ to those of firms in other industries. [ABSTRACT FROM AUTHOR]

We investigate two under-explored factors in mitigating the risk of corporate fraud and regulatory enforcement against fraud, namely institutional investors and political connections. The role of institutional investors in the effective monitoring of a firm's management is well established in the literature. We further observe that firms that have a large proportion of their shares held by institutional investors have a lower incidence of enforcement actions against corporate fraud. The importance of political connections for enterprises, whether in a developed market such as the United States or an emerging market such as China, has been established by previous studies. However, we find evidence of another positive effect of political connections: they may reduce the incidence of enforcement action against corporate fraud. We also find that political connections play a more significant role in reducing regulatory enforcement incidents against non-state-owned enterprises and firms in weaker legal environments, whereas institutional ownership plays a more important role in reducing regulatory enforcement incidents against state-owned enterprises. [ABSTRACT FROM AUTHOR]

We use the occasion of a change in tax policy that raised the tax rate for many of the listed companies in China to examine tax-induced earnings management (TEM) from the perspective of political connections. We find that when the tax rate increased, only those affected firms with politically connected management engaged in TEM. This suggests that, in addition to motivation for managing earnings, capability of influencing tax authorities is also an important determinant of TEM. We also find that TEM helped the firms with politically connected management to reduce their tax burden. [ABSTRACT FROM AUTHOR]

This study draws on the resource dependence theory and institution-based view to examine political connections in the home market and home formal institutions for their impact on the internationalization of emerging market firms in the context of China. The results suggest that political connections at home may prevent emerging market firms from implementing internationalization strategies by reducing the dependence constraints imposed by local governments and foreign firms, whereas home formal institutional development may promote the strategy transition of emerging market firms from building political connections to international expansion and also reduce the negative impact of political connections. Overall, our findings indicate that political connections and formal institutions at home play an important role in shaping emerging market firms’ strategies of outward internationalization. [ABSTRACT FROM AUTHOR]