Political Ties of Listed Chinese Companies, Performance Effects, and Moderating Institutional Factors

Abstract

ABSTRACTAlthough development in China is quite heterogeneous across regions, little research has explored how the value of Chinese firms’ political ties is contingent on the institutional and economic development of firms’ regional environment. This article explores some of the factors that moderate the benefit of political ties, differentiating between ties to central and local government. The study investigates how benefits of ties to central and local government are moderated by regional market and economic development, respectively. The study is based on a quantitative analysis of 858 listed Chinese firms. The results suggest that firms enjoy a positive effect of political ties but mainly ties to central government. The analysis, furthermore, finds these ties to be less valuable in economically well-developed regions. Market development, on the other hand, does not moderate the effects of local or central government ties.