Political connections, overinvestments and firm performance: Evidence from Chinese listed real estate firms
•This paper examines the political connections of listed Chinese real estate firms.•The paper measures political ties of all chief officers and board members.•Political connections are positively related to long-term bank loans.•Political connections are negatively related to return on assets.•Polit...
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| Veröffentlicht in: | Finance research letters 2016-08, Vol.18, p.328-333 |
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| creator | Ling, Leng Zhou, Xiaorong Liang, Quanxi Song, Pingping Zeng, Haijian |
| description | •This paper examines the political connections of listed Chinese real estate firms.•The paper measures political ties of all chief officers and board members.•Political connections are positively related to long-term bank loans.•Political connections are negatively related to return on assets.•Political connections are positively related to corporate overinvestment.
Using a sample of 103 listed real estate firms from 1998 to 2012, this paper examines the influence of firms’ political connections on external financing, corporate investment, and financial performance. The results indicate that political connections are negatively related to return on assets. Moreover, firms with stronger connections are financed with more long-term bank loans and are more likely to overinvest, which partially explains the puzzle of adverse effect of political connections on performance. Taken together, our results suggest that cultivating political connections could be a risky investment and may not always pay off. |
| doi_str_mv | 10.1016/j.frl.2016.05.009 |
| format | Article |
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Using a sample of 103 listed real estate firms from 1998 to 2012, this paper examines the influence of firms’ political connections on external financing, corporate investment, and financial performance. The results indicate that political connections are negatively related to return on assets. Moreover, firms with stronger connections are financed with more long-term bank loans and are more likely to overinvest, which partially explains the puzzle of adverse effect of political connections on performance. Taken together, our results suggest that cultivating political connections could be a risky investment and may not always pay off.</description><identifier>ISSN: 1544-6123</identifier><identifier>EISSN: 1544-6131</identifier><identifier>DOI: 10.1016/j.frl.2016.05.009</identifier><language>eng</language><publisher>San Diego: Elsevier Inc</publisher><subject>Bank loans ; Firm performance ; Overinvestment ; Political connection ; Politics ; Real estate ; Real estate companies ; Return on assets ; Studies</subject><ispartof>Finance research letters, 2016-08, Vol.18, p.328-333</ispartof><rights>2016 Elsevier Inc.</rights><rights>Copyright Academic Press Aug 2016</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c356t-f73048a96184850a9088b1f993d924918f727af168824656958de6f3d53778a63</citedby><cites>FETCH-LOGICAL-c356t-f73048a96184850a9088b1f993d924918f727af168824656958de6f3d53778a63</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktohtml>$$Uhttps://dx.doi.org/10.1016/j.frl.2016.05.009$$EHTML$$P50$$Gelsevier$$H</linktohtml><link.rule.ids>314,780,784,3541,27915,27916,45986</link.rule.ids></links><search><creatorcontrib>Ling, Leng</creatorcontrib><creatorcontrib>Zhou, Xiaorong</creatorcontrib><creatorcontrib>Liang, Quanxi</creatorcontrib><creatorcontrib>Song, Pingping</creatorcontrib><creatorcontrib>Zeng, Haijian</creatorcontrib><title>Political connections, overinvestments and firm performance: Evidence from Chinese listed real estate firms</title><title>Finance research letters</title><description>•This paper examines the political connections of listed Chinese real estate firms.•The paper measures political ties of all chief officers and board members.•Political connections are positively related to long-term bank loans.•Political connections are negatively related to return on assets.•Political connections are positively related to corporate overinvestment.
Using a sample of 103 listed real estate firms from 1998 to 2012, this paper examines the influence of firms’ political connections on external financing, corporate investment, and financial performance. The results indicate that political connections are negatively related to return on assets. Moreover, firms with stronger connections are financed with more long-term bank loans and are more likely to overinvest, which partially explains the puzzle of adverse effect of political connections on performance. Taken together, our results suggest that cultivating political connections could be a risky investment and may not always pay off.</description><subject>Bank loans</subject><subject>Firm performance</subject><subject>Overinvestment</subject><subject>Political connection</subject><subject>Politics</subject><subject>Real estate</subject><subject>Real estate companies</subject><subject>Return on assets</subject><subject>Studies</subject><issn>1544-6123</issn><issn>1544-6131</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2016</creationdate><recordtype>article</recordtype><recordid>eNp9kD9PwzAUxC0EEqXwAdgssdJgx7Fjw4Sq8keqBAPMlkmehUNiFzuNxLfHpYiR6d1wd-_0Q-ickoISKq66wsa-KLMsCC8IUQdoRnlVLQRl9PBPl-wYnaTUEVLWshYz9PEceje6xvS4Cd5DM7rg0yUOE0TnJ0jjAH5M2PgWWxcHvIFoQxyMb-AarybXQlbYxjDg5bvzkAD3Lo3Q4gi5NBeYEX6i6RQdWdMnOPu9c_R6t3pZPizWT_ePy9v1omFcjAtbM1JJowSVleTEKCLlG7VKsVaVlaLS1mVtLBVSlpXgQnHZgrCs5ayupRFsji72vZsYPrd5ge7CNvr8UlNJlSKKEZ5ddO9qYkgpgtWb6AYTvzQlesdUdzoz1TummnCdmebMzT4Def7kIOrUuB2A1sWMTrfB_ZP-Bumlfvc</recordid><startdate>20160801</startdate><enddate>20160801</enddate><creator>Ling, Leng</creator><creator>Zhou, Xiaorong</creator><creator>Liang, Quanxi</creator><creator>Song, Pingping</creator><creator>Zeng, Haijian</creator><general>Elsevier Inc</general><general>Academic Press</general><scope>AAYXX</scope><scope>CITATION</scope></search><sort><creationdate>20160801</creationdate><title>Political connections, overinvestments and firm performance: Evidence from Chinese listed real estate firms</title><author>Ling, Leng ; Zhou, Xiaorong ; Liang, Quanxi ; Song, Pingping ; Zeng, Haijian</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c356t-f73048a96184850a9088b1f993d924918f727af168824656958de6f3d53778a63</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2016</creationdate><topic>Bank loans</topic><topic>Firm performance</topic><topic>Overinvestment</topic><topic>Political connection</topic><topic>Politics</topic><topic>Real estate</topic><topic>Real estate companies</topic><topic>Return on assets</topic><topic>Studies</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Ling, Leng</creatorcontrib><creatorcontrib>Zhou, Xiaorong</creatorcontrib><creatorcontrib>Liang, Quanxi</creatorcontrib><creatorcontrib>Song, Pingping</creatorcontrib><creatorcontrib>Zeng, Haijian</creatorcontrib><collection>CrossRef</collection><jtitle>Finance research letters</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Ling, Leng</au><au>Zhou, Xiaorong</au><au>Liang, Quanxi</au><au>Song, Pingping</au><au>Zeng, Haijian</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Political connections, overinvestments and firm performance: Evidence from Chinese listed real estate firms</atitle><jtitle>Finance research letters</jtitle><date>2016-08-01</date><risdate>2016</risdate><volume>18</volume><spage>328</spage><epage>333</epage><pages>328-333</pages><issn>1544-6123</issn><eissn>1544-6131</eissn><abstract>•This paper examines the political connections of listed Chinese real estate firms.•The paper measures political ties of all chief officers and board members.•Political connections are positively related to long-term bank loans.•Political connections are negatively related to return on assets.•Political connections are positively related to corporate overinvestment.
Using a sample of 103 listed real estate firms from 1998 to 2012, this paper examines the influence of firms’ political connections on external financing, corporate investment, and financial performance. The results indicate that political connections are negatively related to return on assets. Moreover, firms with stronger connections are financed with more long-term bank loans and are more likely to overinvest, which partially explains the puzzle of adverse effect of political connections on performance. Taken together, our results suggest that cultivating political connections could be a risky investment and may not always pay off.</abstract><cop>San Diego</cop><pub>Elsevier Inc</pub><doi>10.1016/j.frl.2016.05.009</doi><tpages>6</tpages></addata></record> |
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| source | Elsevier ScienceDirect Journals Complete |
| subjects | Bank loans Firm performance Overinvestment Political connection Politics Real estate Real estate companies Return on assets Studies |
| title | Political connections, overinvestments and firm performance: Evidence from Chinese listed real estate firms |
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