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Implications of political connections and CSR: Evidence from Chinese listed firms

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posted on 2024-11-12, 11:37 authored by Siwen Song
Political connection is believed to be one of the most important forms of capital for firms’ development and growth worldwide. As the largest developing country, China is criticised for the lack of sound legal and political infrastructure. Due to a powerful government, political connection is important for firms to survive in the Chinese markets. Therefore, Chinese firms actively participate in establishing political strategy to seek rent from the government. Another important strategy Chinese firms employ nowadays is to disclose CSR report after the advocacy by the Chinese government to build a ‘harmonious society’. However, the ultimate purpose and the consequence of Chinese firms being ‘socially responsible’ are unclear. The present thesis aims to disentangle the real functions of political connection and CSR disclosure among Chinese listed firms. The first study of the present thesis investigates the functions of political connections between family firms and non-family firms among non-state-owned enterprises (non-SOEs). This study adopts a natural experiment approach to examine the responses of Chinese family firms to political disconnection following the exposure of corruption scandals. The results are consistent with the view that family firms build political connections for better performance, access to external financing, and more investment opportunities. The study also indicates that the impact of political connections built through direct bribery is more profound than those built through personal connections. The larger impact is also shown for firms located in provinces with a low level of marketisation, firms located in the same provinces as their related corrupt officials, and firms belonging to industries with high corruption intensity.

History

Year

2020

Thesis type

  • Doctoral thesis

Faculty/School

School of Accounting, Economics and Finance

Language

English

Disclaimer

Unless otherwise indicated, the views expressed in this thesis are those of the author and do not necessarily represent the views of the University of Wollongong.

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