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The voluminous strategy research on the determinants of corporate scope is often premised on a well-established property rights regime, which contrasts with the weak property rights protection that still characterizes most countries today. We address this gap by applying property rights theory to theorize and empirically examine how the strengthening of the property rights regime affects corporate scope. Our analysis exploits the enactment of a property law that enhanced the formal protection of private properties in China as a quasi-experiment. We show that with a strengthened property rights regime, the horizontal relatedness among private firms' businesses increases, but their vertical relatedness decreases, compared with state-owned firms. Further, these effects are less prominent for politically connected firms that are afforded informal protection of property rights. Our findings shed new light on the property rights regime as a critical determinant of firms' horizontal and vertical scope. [ABSTRACT FROM AUTHOR]

In this paper, we investigate the impacts of China's anti-corruption campaign on firms' operation and performance in the energy industry. Our theoretical model predicts that the campaign has resulted in those energy firms that had been strongly connected to government reducing their non-productive political activities, receiving fewer benefits from the government, and improving their efficiency. This is tested using a unique panel dataset of publicly listed energy firms in China for 2007-2017. Since the advent of the campaign, energy firms have less access to higher bank credits and preferential taxes through political connections, and the increasing political pressure has reduced firms' participation in philanthropy donations and bribery payments by 36% and 6.8%, respectively. Energy firms are also innovating more to compensate for their losses from the campaign, with a 23.8% increase in the number of invention-type patents found. Thus, the productivity of energy firms has been boosted by 3.9% on average since the campaign began. Our findings thus provide confirmative support that a firm responds strategically to the external political shocks through internal resource reallocation towards innovation in its operation and production. [ABSTRACT FROM AUTHOR]

Preventing firms from engaging in greenwashing is a topic of significant theoretical and practical interest. This study examines the impact of penalties for environmental violations (PEVs) on mitigating greenwashing using a dataset of firms listed on China's A‐share market operating in heavily polluting industries from 2014 to 2020. We also examine how firm‐level characteristics moderate the relationship between PEVs and greenwashing. Our results demonstrate that PEVs can deter firms from engaging in greenwashing and that this negative effect is more pronounced for firms with greater financial slack, effective internal controls and political connections. Additional analysis indicates that PEVs have a negative effect on greenwashing for firms in the growth and mature stages but not for firms in the 'shake‐out' stage, and that there is a deterrence effect. Our findings have important implications for mitigating greenwashing behaviours through collaboration between governments and firms. [ABSTRACT FROM AUTHOR]

This paper investigates the association between corporate social responsibility (CSR) and tax avoidance (TA), with a particular focus on how political connections influence this relationship. The study examines non-financial companies listed on the Egyptian Exchange (EGX) over the period from 2017 to 2022, encompassing a final sample of 70 firms and 420 firm-year observations. Pooled Ordinary Least Squares (OLS) and fixed-effects regression methods are utilized for statistical analysis. The findings reveal a significant positive correlation between CSR activities and a higher degree of TA, suggesting that companies involved in CSR are more likely to engage in TA. Moreover, political connections are shown to have a moderating effect, further strengthening this relationship. To the authors' knowledge, this research is one of the first attempts to explore the moderating influence of political connections on the CSR-TA relationship in an emerging market context. By doing so, it extends the debate in the literature regarding the negative role played by political connections in increasing TA in developing markets. Previous studies primarily focused on the direct link between CSR and TA, but this study sheds light on the nuanced interaction between these factors when political ties are considered. [ABSTRACT FROM AUTHOR]

Do political connections affect bank efficiency during crises? This study addresses this question by adopting a two‐stage approach that performs a quantile regression analysis on a unique dataset of listed banks in a region that has witnessed both financial and political crises, namely the Middle East and North Africa. Our results show that political connections are a driving force behind bank inefficiency. We find that the least efficient banks have the most significant association with political connections, thus supporting bailout theory. We also find that political connections influenced the efficiency of banks during the financial crisis, but not during the regional political crisis. Our results provide new evidence on the applicability of established political connection theories during political turmoil. [ABSTRACT FROM AUTHOR]

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]

Using the data of 3319 Chinese listed companies from 2007 to 2019, this study examines how companies performed under the stress of regional environmental regulations. We discover that increased regional environmental regulation intensity efficiently lowers companies' idiosyncratic risk with empirical process. This result proves that environmental regulation pressure could bring unexpected benefits to business situation of companies, which is reconfirmed through several robustness tests. The mechanism analysis further demonstrates that internal governance, rather than managerial shortsightedness and added environmental investment, strengthens the benefits, among internal factors. Moreover, this relationship is more noticeable for non-energy and non-state-owned firms, while linkages with bank or government are found to be ineffective on this issue. The R&D investment of local companies above designated size performs better than other two external factors (regional legal governance, investment on technology and education). Our study verifies an unattended role of environmental regulation on the companies' idiosyncratic risk, revealing that the environmental initiatives of regional governments do not always adversely affect local companies. Our study could facilitate the strategic arrangements of policymakers, businesses, investors, and other stakeholders [ABSTRACT FROM AUTHOR]

Introduction: Government-business relations are a concentrated manifestation of the interaction process and outcomes between the government and enterprises, directly influencing the social capital and institutional environment upon which businesses rely. Sound government-business relations are crucial for addressing environmental issues and promoting high-quality development in China. Methods: This study extensively examines how New Government-business Relations (NGR) impact Corporate Environmental Performance (CEP) by analyzing A-share listed companies from 2017 to 2021 and applying the regulatory capture theory. Results: The empirical findings show that NGR can prevent environmental regulatory capture, thereby improving CEP. After conducting several robustness tests, such as substituting the dependent variable, using instrumental variables, and performing dynamic panel analysis, the results remain consistent. Additionally, the mechanism analysis reveals that NGR can effectively thwart environmental regulatory capture resulting from rent-seeking behavior and political connections, leading to enhanced CEP. Moreover, additional research indicates that the beneficial impact of the NGR on the environmental performance of non-high-pollution industry enterprises, mature enterprises, and businesses operating in regions with stringent environmental regulations is more significant. Discussion: Building on prior literature, this paper augments the body of relevant research on environmental regulatory capture within the Chinese context, offering fresh insights and empirical evidence to comprehend the evolving government-business relations in contemporary times and their significance in environmental conservation. [ABSTRACT FROM AUTHOR]

This study investigates the impact of board characteristics on the relationship between political connections and cash holdings in Asian countries. The findings suggest that Asian firms with political connections, large boards, and gender diversity have lower cash holdings, while firms with CEO duality have higher cash holdings. Further, the study provides unique evidence that Asian firms with large boards and gender diversity have a moderating effect and strengthen the negative influence of political connections on cash holdings. We also find that CEO duality moderates the influence of political connections on cash holdings in Asian countries. The authors conclude that strong board monitoring and governance mechanisms are crucial for the effective use of cash, particularly in firms with political connections. This research contributes to the literature by presenting novel evidence that board characteristics critically influence the relationship between political connections and cash holdings in the Asian context. [ABSTRACT FROM AUTHOR]

This study examines British Petroleum's (BP) strategic framing and deployment of politically connected governance (PCG) practices amidst geopolitical disruptions from 2010 to 2017. Through thematic analysis, the study identifies three PCG practices developed by BP during reputational disruption, regulatory challenges and political upheavals. Each practice, supported by clusters of political and (non‐)executive actors, shares joint expertise and is deployed defensively or proactively amidst geopolitical disruptions. BP's framing strategies, which include responsiveness, compliance and collaboration, aim to alter stakeholders' perceptions. These understandings affect governance code setters, policymakers and related academic literature. [ABSTRACT FROM AUTHOR]

Do forms of state ownership and politically connected senior management affect the incidence of financial statement fraud? In this study, we consider these questions and provide new evidence as to the factors influencing fraud commission and detection for Chinese listed firms between 2007 and 2018. Six major types of financial statement fraud activities are identified. Using a bivariate probit model, developed to address partial observability concerns, we report state ownership lowers the likelihood of fraud detection, while increasing a firms' propensity to commit fraud. In addition, state-owned enterprises (SOEs) controlled by local government are more likely to engage in fraud and escape regulatory punishments, relative to SOEs controlled by central government. The effect of politically connected senior management over fraud commission or regulatory detection is also diluted by the presence of state ownership. Moreover, the role of state ownership in encouraging fraud commissions and escaping from regulatory punishments is more pronounced for the local non-politically connected SOEs. [ABSTRACT FROM AUTHOR]

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In this paper, I assess the existence of a political connection premium for Italian municipalities during the so-called "Second Republic" (1991–2011). The early 1990s witnessed a seminal event in Italian political history with the "Mani Pulite" ("Clean Hands") investigation following the fall of the Berlin Wall. Subsequently, major political parties dissolved, culminating in a bipolar political landscape characterized by cyclical alternation between center-right and center-left factions (extending until at least 2011). Exploiting population data on small and medium-sized Italian municipalities between 1991 and 2011, I found that "politically connected" municipalities showed a population premium of about 2.5% compared to "non-politically connected" ones. The results are robust to NUTS-3 fixed effects, to a comprehensive set of controls, and to a full set of robustness checks. The relationship is confirmed using aggregate municipal income data as an additional proxy of local economic growth. Over and above this, social capital and the quality of local institutions seem to play a pivotal role in enabling the political connection. Election-related checks suggest the connection as two-way: using municipal data from the 2013 and 2018 general elections, I found that the treated municipalities depicted a higher turnout and fewer populist votes. [ABSTRACT FROM AUTHOR]

This study investigates the impact of CEO characteristics—specifically CEO age, founder status, and family membership—on investment efficiency in Jordanian non-financial companies, with a focus on the moderating role of political connections. Drawing on the existing literature, we identify conflicting views regarding how these characteristics influence investment decisions. Some studies suggest that younger CEOs may adopt more aggressive investment strategies, while older CEOs tend to be conservative, leading to balanced resource allocation. Similarly, CEOs with founder status and family membership are thought to have an emotional attachment to the company, theoretically resulting in cautious investment behavior. However, empirical evidence remains mixed. By using data from 62 non-financial firms listed on the Amman Stock Exchange (ASE) from 2019 to 2023, this study employs regression analysis to explore these relationships. The findings reveal that CEO age contributes to investment efficiency by mitigating both over- and under-investment. Contrary to expectations, CEO founder status shows no significant effect on investment efficiency. Additionally, family-member CEOs exhibit a tendency toward under-investment, driven by a desire to preserve family wealth. Political connections further complicate these dynamics, encouraging riskier investment strategies while diluting the positive effects of CEO characteristics. These results provide new insights into the intricate interplay between CEO traits and political networks, contributing to the discourse on corporate governance in emerging markets. The study concludes with practical implications for policymakers and company boards, emphasizing the need for balanced leadership selection strategies to optimize investment efficiency. [ABSTRACT FROM AUTHOR]

US state governments frequently provide firms with targeted subsidies. In exchange, recipients promise to create or retain a certain number of jobs in the subsidizing state. Using novel hand-collected data, we address three questions: (i) the extent to which firms meet job creation targets promised in their applications, (ii) the factors that determine which firms meet the targets, and (iii) the benefits to firms from meeting those targets. We find that 63% of subsidies awarded to publicly traded U.S. firms between 2004 and 2015 meet their promised job creation targets. Firms with poorer labor practices are less likely to meet their targets, as are politically connected firms that receive subsidies in election years. Conversely, promised job targets are also more likely to be met for subsidies accompanied by government press releases but less likely to be met for subsidies accompanied by firm press releases; the latter likely reflects the fact that firms put out press releases for larger subsidies with more ambitious job targets. In terms of consequences, firms that meet job targets are more successful at obtaining subsequent subsidies both in and out of subsidizing states. However, while firms' success in meeting job targets is associated with an uptick in positive media coverage, this does not flow through to ESG ratings, even on scores specific to community impact. Our results should be of interest to both academics and policymakers interested in the design of state-level economic incentives. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to examine the relationship between economic policy uncertainty (EPU) and environmental, social and governance (ESG) disclosure and the moderating role of board network centrality and political connections on the nexus between EPU and ESG. Design/methodology/approach: Using a sample of the UK Financial Times Stock Exchange (FTSE) 350 firms during 2007 to 2018, this study examines the relationship between EPU and the ESG disclosure and the moderating effects of board centrality and board political connections using multivariate regression analysis. Findings: The results show that firms tend to increase their ESG disclosure when EPU rises. The results also reveal that EPU is negatively associated with firms' financial performance and ESG performance is less evident for firms with higher ESG disclosure scores and is observed only when board centrality is relatively low and the political connections are absent. The study finds further evidence to support the hypotheses during periods of heightened conflicts (i.e. global financial crisis and the Brexit referendum). Practical implications: This study offers practical insights for corporate managers who attempt to preserve and enhance their firms' competitive advantages via maintaining its stakeholders support through greater ESG disclosure during heightened EPU periods. Originality/value: By integrating the resource-based view (RBV) and the signaling theory, this study extends the signaling theory and RBV by examining the relationship between EPU and ESG disclosure as a signal to its stakeholders and information advantages that board centrality and political connections bring to the company to reduce information asymmetry between the firms and its stakeholders during EPU. [ABSTRACT FROM AUTHOR]

Purpose – This study aims to analyse the political connections of Portuguese companies through the members of the board of directors, exploring how these connections influence, in particular, the composition and characteristics of the boards. Design/methodology/approach – The research used a strategy based on analysing the financial statements and curriculum vitae of the directors of Portuguese companies listed on Euronext Lisbon from 2014 to 2019. The political connections of board members were examined, considering the variables identified in the existing literature. Findings – The results indicate that companies with political connections maintain these relationships for long periods and have a greater number of members on the board of directors compared to companies without such connections. Directors with political experience tend to occupy non-executive positions, suggesting that companies may value political contacts more than the management skills of these directors. It was also found that there are politically connected directors who belong to multiple boards and that women appointed to the board are less likely to have a political background, reflecting male dominance in Portuguese politics. Research limitations/implications – The main limitations of this study include the small number of listed companies in the sample, which may affect the statistical robustness of the results, as well as the use of secondary sources, which may not capture all relevant policy linkages. In addition, the results are specific to the Portuguese context and may not be generalisable to other countries or other regions of the world. Originality/value – This study contributes to the understanding of political connections in Portuguese companies, offering valuable insights into how these connections influence board composition and can impact corporate strategy and governance. The findings of this study can be especially useful for business leaders looking to optimise the formation of their boards of directors.

This study examines the impact of military cultural atmosphere on corporate innovation risk-taking within the unique institutional context of China. Leveraging an unbalanced panel dataset of 3506 Chinese A-share listed companies, comprising 15,381 observations from 2010 to 2022, this empirical analysis captures dynamic firm-level changes over time. Using ordinary least squares (OLS) regression to assess the effects of military cultural atmosphere and two-stage least squares (2SLS) to address potential endogeneity concerns, this study ensures robust results. The findings reveal that military cultural atmosphere, characterized by discipline, hierarchy, and collective responsibility, significantly enhances firms' propensity for innovation risk-taking. Additionally, political connections emerge as a key mediating factor in this relationship, while perceived power within the organization moderates the mediation effect, exhibiting a negative moderation. These results underscore the critical role of military backgrounds among senior executives in shaping corporate culture and strategic decision-making, particularly in China's policy-driven market environment. This study offers valuable insights for fostering long-term corporate resilience and strategic innovation, while also contributing to a deeper understanding of the interaction between corporate culture and innovation across different institutional settings. [ABSTRACT FROM AUTHOR]

This paper aims to explore whether the over-reliance on political resources hampers corporate technological innovation and the role of environmental regulation in mitigating the adverse effect. A simplified theoretical framework is proposed to combine political ties, environmental regulations, and corporate innovation. Then, based on the data for listed private companies in China's heavy pollution industry, our empirical results show that political relations have negative impacts on both patent licensing and R&D investment, indicating the existence of a political resource curse in listed private companies in China's heavy pollution industry. The transmission mechanisms include mitigating market competition and inducing overinvestment, but increasing the rent-seeking motivation is not a channel through which political connections negatively affect corporate innovation. Further empirical analysis demonstrates that environmental regulations help eliminate the curse effect of political ties on technological innovation at the firm level in China, through increasing market competition and reducing overinvestment. The findings of this paper provide insights for optimizing environmental regulation policies, which are conducive to inducing technical innovation in politically connected enterprises. [ABSTRACT FROM AUTHOR]

Research Summary: We examine how geopolitical volatility—the instability of bilateral political affinity between countries—affects foreign subsidiary investments. Building on prior work that shows that the level of political affinity between countries facilitates foreign investments, we argue that the volatility of political affinity impedes firms' ability to form expectations about stakeholder behavior and reduces subsequent investments in subsidiaries. We further argue that the effect of volatility of political affinity on foreign subsidiary investments is less pronounced when the level of political affinity between countries is high and when the firm has strong political connections at home. Our analyses examine 1054 US firms and their subsidiary investments in 106 countries from 2000 to 2015. Managerial Summary: Geopolitical risk has emerged as an important factor in foreign investment decisions in recent years. The rise of geopolitical tensions worldwide and the fragmentation of relationships between countries have introduced new dimensions to foreign investment risks. We study the propensity for sudden and unpredictable shifts in the political relationship between countries—that is, volatility of political affinity in their bilateral political relations—and its effect on firms' foreign subsidiary investments. We show that volatility of political affinity negatively affects the number of subsidiaries, employees, and local sales in the host country because when bilateral relations change suddenly, it is more difficult for multinational firms to predict how stakeholder behavior will impact the performance of their investments. [ABSTRACT FROM AUTHOR]

Anticorruption is a prevalent global phenomenon and has yielded many good results. This study empirically tests the real effect of China's anticorruption on corporate acquisition premiums and explores its mechanisms. We find that after the exposure of and crackdown on corrupt provincial officials, firms without political connections had lower mergers and acquisitions (M&A) premiums than those with political connections. Cross‐sectional test results show that when firms are private or in areas with high marketization, the anticorruption event has a greater impact on their acquisition premiums. The channel test demonstrates that anticorruption reduces the value of political connections and improves the negotiation advantages of nonpolitically connected firms, enabling them to pay lower M&A premiums. Our findings indicate that anticorruption can create a considerably fair business environment. Moreover, we confirm the real effects of anticorruption on the distortion of resource allocation at the firm level. Finally, the results of this research have policy implications for the world's largest emerging market. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of political connections on the performance of Korean chaebol companies. We use two indicators to measure the ability and diversity of political connections and find that chaebol companies are more likely to establish political connections compared to non-chaebol firms, which gives them an advantageous position in government procurement bidding. Significantly, our findings indicate that political connections correlate positively with the monetary value of government contracts secured by chaebols, underscoring the direct economic benefits of these connections. Overall, our study sheds light on the motivation for the political networks of chaebol firms and contributes to a better understanding of the direct benefits of political connections. [ABSTRACT FROM AUTHOR]

This study investigates the impact of audit quality, internal audit organizational structure, political connections, and company size on litigation risk in the consumer goods industry sector listed on the Indonesia Stock Exchange during the period from 2017 to2022. A quantitative approach was used by applying Fixed Effects, Ordinary Least Squares, Random Effects, and Robust Regression analysis simultaneously to analyze panel data. The results showed that high audit quality serves as a significant positive signal in reducing the risk of lower litigation, providing confidence to stakeholders that financial statements can be more reliable and free from material misstatement. Meanwhile, a better internal audit organizational structure introduces complexity in the management of litigation risk as the organization grows, highlighting the possibility of more complicated implications in the context of signals, when internal audit placement does not fit the needs of the organization. Political connections and company size provide positive signals regarding litigation risk, albeit with different levels of significance, indicating complexity in the dynamics of political signals and company size. The findings of this study can guide stakeholders in the appointment of agents to manage the company. [ABSTRACT FROM AUTHOR]

I study whether firms that receive targeted U.S. state‐level subsidies are more likely to subsequently engage in corporate misconduct. I find that firms are more likely to engage in misconduct in subsidizing states, but not in other states that they operate in, after receiving state subsidies. Using data on both federal and state enforcement actions, and exploiting the legal principle of dual sovereignty for identification, I show that this finding reflects an increase in the underlying rate of misconduct and that this increase is attributable to lenient state‐level misconduct enforcement. Collectively, my findings present evidence of an important consequence of targeted firm‐specific subsidies: nonfinancial misconduct that potentially could impact the very stakeholders subsidies are ostensibly intended to benefit. [ABSTRACT FROM AUTHOR]

Why do citizens prefer to utilize personal connections (e.g. guanxi) with government officials to access public services? Conventional wisdom suggests that improvements in formal institutions can reduce the popularity of informal behaviors; however, limited research has explored the relevant roles of e-government and anticorruption endeavors. Thus, based on survey data from 30 Chinese municipalities and multilevel regression designs, this study shows that citizens in cities with higher e-government development levels or who perceive governments' anticorruption efforts to be effective are less likely to perform guanxi practices. The negative effect of e-government is also more salient among individuals with political connections. Therefore, this study contributes to the ongoing discussion on the relationship between formal institutions and guanxi practices by revealing the specific ways in which e-government development and anticorruption efforts lessen individuals' reliance on guanxi. [ABSTRACT FROM AUTHOR]

Nonprofit organizations receive charitable contributions from both institutional donors and individual donors. Existing studies have traditionally focused on factors related to nonprofits' total donation income rather than exploring similarity and difference in the two types of donors' preference for donation recipients. Following Wang's in Nonprofit and Voluntary Sector Quarterly, 52(3), 787–816 (2023) call for the distinction between institutional donors (i.e., corporations) and individual donors, this study regresses corporate giving and individual giving separately on four themes of explanatory variables, namely organizational legitimacy, political connections, organizational attributes, and environmental factors, of a sample of 2,021 Chinese foundations for the year 2013. The results showed that multiple variables are related to corporate giving and individual giving differently to varying degrees. This study suggests future research (1) consider the potentially different effects of predictors on multiple sources of giving when analyzing nonprofits' total donation income and (2) theorize the different preferences of the two types of donors. [ABSTRACT FROM AUTHOR]

Politically connected firms critically rely on their sociopolitical capital to compete; however, a policy-induced loss of board political connections may pose a serious challenge for focal firms and prompt them to develop compensatory moves. Drawing upon resource dependence theory and the nonmarket strategy literature, we examine if and how focal firms may address this challenge through intensifying their bribery activities. Following a year 2013 policy shock that closed the revolving door between former government officials and connected firms in China, we identify a substantial increase of bribery expenditure in a sample of public corporations whose political independent directors were forced by the central government to resign in the subsequent years. Furthermore, we investigate how the strength of this response varies with a host of firm-level contingencies that capture dependence scope and dependence asymmetry in the business-government dyad at the time of the policy announcement. Our study contributes to strategy and governance literatures by demonstrating how firms restructure power relationships after the loss of board political capital. It also sheds light on the regulation of revolving doors under weak institutions by revealing the irony of a well-intentioned "anticorruption" government policy. [ABSTRACT FROM AUTHOR]