Political Connections、Official Inspection and Firm Performance
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| Title | Political Connections、Official Inspection and Firm Performance
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| Author | Luo Danglun, Ying Qianwei and Wu yanting |
| Organization | Lingnan (University) College,Sun Yat-Sen University; School of Business, Sun Yat-Sen University |
| Email | luodl@mail.sysu.edu.cn; yingqianwei@gmail.com; wuyanting@gmail.com |
| Key Words | Official Inspection; Political Connections; Firm Performance |
| Abstract | The official inspections are attracting increasingly focus from the firms, which is becoming an important channel of obtaining political connections. This paper investigates the relationship among firm characteristics, official inspection and firm performance based on the data collected from the listed firms in China between 2004 and 2007. We find that:(1) Firms with renowned band, advanced technology and greater size attract more official inspections. Generally, the probability of official inspection is higher for famous firms, and the firms characteristics varies when attracting official inspections with different levels. In particular, official inspections from central government are focusing more on the technologies, while those from provincial government and below hold preference on band characteristics.(2) Political connections that the firms previously owned would significantly promote the probability of official inspection.(3) Official inspections play an active role on firm performance. After controlling sampling bias through PSM, we find firms with official inspection are encountering better changes on performance, comparing to those without inspections, and the magnitude of this change is enhanced when the official inspections are of higher levels. The conclusion we find is helpful for our understanding of the influence from official inspections to the allocations of resources for firms. |
| Serial Number | WP29 |
| Time | 2011-01-06 |
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