Political Connections Research Articles

Political corruption and cost stickiness: Evidence from China

AbstractThis study investigated the effect of local corruption on the cost behaviour of publicly traded firms in China over the period from 2007 to 2017. Our findings show that firms situated in regions with higher corruption levels tend to exhibit greater cost stickiness, primarily driven by managerial empire‐building incentives and rent‐seeking behaviours. This effect is particularly pronounced in firms subject to greater government intervention, weaker internal controls, fewer political connections, and less market competition. Furthermore, this corruption‐induced cost behaviour is found to negatively impact firm value. The results underscore the critical role of institutional environments, particularly corruption, in shaping corporate cost management strategies. This study provides valuable insights into how corruption influences economic outcomes for firms and offers guidance for managers, regulators, and investors to address these challenges and optimise cost management practices.

The Lithuanian Nomenklatura of the Period of Stagnation in the Eyes of the Soviet “Governor General”: the Clash during the Appointment of Petras Griškevičius

The article, based on the author’s conversation with Valery Charazov (born 1918), second secretary of the Lithuanian Communist party Central Committee (further LCP CC) 1967–1978, archive sources, and memoirs of other activists of that period, describes Charazov’s attitude to the situation in Soviet Lithuania after the death of the LCP CC first secretary Antanas Sniečkus, his evaluation of the Republic’s highest nomenklatura as well as his active role in appointing second secretary Petras Griškevičius as first secretary of LCP CC. Valery Charazov’s activity as LCP CC second secretary is similar to the activities of second secretaries of other republics, and it allows us to see the wider pattern of their activity throughout the Soviet Union. On the other hand, certain aspects allow us to see the Soviet Union–wide political processes from the local perspective of a republic. This is revealed though analysis of the actions of Charazov’s Lithuanian nomenklatura opponents – how they used their political connections with Ukrainian CP CC first secretary Shcherbitsky and with the Dnepropetrovsk political group which became entrenched during Leonid Brezhnev’s rule, as well as through the review of the political heritage of Antanas Sniečkus, who was also a client of the “shadow” USSR cardinal Mikhail Suslov. The article looks at the survey of the Lithuanian nomenklatura carried out by Valery Charazov. With this survey he sought to elect and present to Moscow the most suitable candidate to succeed Antanas Sniečkus. This survey and the character descriptions of candidates made in its wake was the informational basis that enabled the election of a candidate satisfactory to both Moscow and the local nomenklatura. The article presents the results of the survey carried out by Charazov. The following candidates were nominated for the position of LCP CC first secretary: chairman of the Council of Ministers of LSSR Juozas Maniušis, three LCP CC secretaries – Secretary for Industry and Construction Algirdas Ferensas, Secretary for Ideology Antanas Barkauskas, Secretary for Agriculture Rimgaudas Songaila – as well as the chairman of the party’s Vilnius city committee Petras Griškevičius, chairman of the LSSR labour unions’ committee Kazimieras Mackevičius, and head of LCP CC Organisational-party work division Vytautas Astrauskas. In the 47 interviews with contemporary party and Soviet leaders, the candidacy of Petras Griškevičius gained the most support. This activist was the first choice of 12 persons, and was considered a potential candidate (among others) – by 29 persons. Antanas Barkauskas was the first choice of one of those interviewed and was considered a possible candidate by 11 persons; Rimgaudas Songaila was no one’s first choice, but was seen as a possible candidate by 9 persons; Kazimieras Mackevičius, like Songaila, was not anyone’s preferred candidate, but 6 representatives considered him a possible candidate. Charazov’s survey revealed how unpopular Maniušis, who was viewed as one of the favourites, was. No one considered him as a first choice and 17 people considered him a possible candidate. Arguably, the main result of Charazov’s survey was the genuine characterisation of the nominees. It was distinguished from other formal responses of the time by the open identification of negative character traits of the candidates and a rather accurate description of their personalities.

Problems of the public good in higher education: building the common amid sovereign individualism, capital and the state

AbstractAnglophone societies in which the sovereign individual is primary vis and vis social relations, and policy focuses on economic competition and consumption in education, find it hard to grasp non-pecuniary outcomes in higher education. These include the self-formation of students as persons and collective goods like knowledge, technological capability, social inclusion, political connectedness, tolerance and global understanding. While other cultures generate insights into non-pecuniary outcomes, the paper focuses critically on meanings of ‘public’ in English: (1) public as state, (2) public good as universal well-being, (3) public as inclusive-communicative as in ‘public opinion’, (4) public and private goods in economics. None of these meanings of ‘public’ enables the resolution of the non-pecuniary outcomes of higher education. The paper tackles four central questions. First, why is there an undue emphasis on the individual and individualised pecuniary benefits, vis a vis social relations, in Euro-American and especially Anglophone societies? Second, can these societies strengthen public or common goods by augmenting the state in higher education? Third, what other practices of public and common might advance non-pecuniary outcomes? Fourth, how to advance collective outcomes beyond the nation-state? The paper finds that while Anglophone public good is constrained by the state in capitalist society, higher education’s role in the production and distribution of common good through primarily local networks, while also pressuring central states to provide support, offers a promising way forward.

How the synergy of government intervention and digital transformation affects carbon emission: evidence from a quasi-natural experiment in China

ABSTRACT Digital transformation (DT), government intervention (GI) and carbon emissions (CE) have always been the focus of academic attention, and arguments on the relationship amongst them exist. This study seeks to introduce the degree of political connection and government subsidies (GS) as GI into the relationship between DT and CE at the micro-level and aims to provide a new perspective for resolving previous arguments. By using a difference-in-differences model, the impact of DT on reducing CE is measured by taking a sample of 3925 observations from listed enterprises in China and dividing them according to the following degrees of political connection: none, moderate and high. Results show that DT is effective in reducing CE. Additionally, DT of enterprises with moderate political connections has had the greatest effect on reducing CE, followed by the effect of enterprises with high political connections. The effect of enterprises with no political connections is insignificant. If enterprises with a moderate or no political connections gains more GS, then the negative impact of DT on CE will be stronger. This study provides new evidence that DT reduces CE at the micro-level and presents a new perspective on reaching a consensus by introducing GS and the degrees of political connection.

Local protectionism and national oversight: political connection and the enforcement of environmental regulation in China

Local protectionism and national oversight: political connection and the enforcement of environmental regulation in China

Corporate political connection building and stock price volatility: evidence from Chinese-listed companies

Corporate political connection building and stock price volatility: evidence from Chinese-listed companies

State ownership, political connection and ESG performance

State ownership, political connection and ESG performance

Negative information hoarding in politically connected firms: The influence from the central environmental protection inspections

This study examines how managerial political connections affect corporate information environment in the context of central government environmental inspections. We find that politically connected firms are associated with higher crash risk than firms without such connections after central government inspections. In addition, we find that firms are more prone to crash risk when they are with achieved political connections (e.g. appointed as members of political advisory bodies), but not ascribed political connections (i.e. have work experience as government officials). Further analyses indicate that politically connected firms are more prone to crash risk after central government inspections due to increased reputational concerns. Overall, our study highlights that politically connected firms may face more challenges in managing negative information when there is intensified regulatory scrutiny, which exacerbates the risk profile of firms.

Who, Republican or Democrat CEOs, laughs last? Political cycles in the market for corporate directors

This paper examines the relationship between CEOs' political preferences and their post-retirement directorship opportunities, proposing that political donations may serve as signals of political influence or connections that impact career prospects in the market for corporate directors. Using data on political contributions from 1998 to 2016, we explore whether CEOs' political affiliations create a cyclical pattern in the professional labor market, favoring those aligned with the ruling party. Our analysis reveals that Republican partisan CEOs are more successful in securing directorships under Republican regimes (George Walker Bush, 2003∼2008), while the reverse holds under Democratic regimes (Barack Hussein Obama, Jr. 2009∼2014). These results remain robust after addressing potential endogeneity using presidential election outcomes as an instrumental variable.

Decoding the impact of political uncertainty on IPO underpricing in China

PurposePolitical factors play a crucial role in China's initial public offering (IPO) market due to its distinctive institutional context (i.e. “economic decentralization” and “political centralization”). Given the significant level of IPO underpricing in China, we examine the impact of local political uncertainty (measured by prefecture-level city official turnover rate) on IPO underpricing.Design/methodology/approachUsing 2,259 IPOs of A-share listed companies from 2001 to 2019, we employ a structural equation model (SEM) to examine the channel (voluntarily lower the issuance price vs aftermarket trading) through which political uncertainty affects IPO underpricing. We check the robustness of the results using bootstrap tests, adopting alternative proxies for political uncertainty and IPO underpricing and employing subsample analysis.FindingsLocal official turnover-induced political uncertainty increases IPO underpricing by IPO firms voluntarily reducing the issuance price rather than by affecting investor sentiment in aftermarket trading. These relations are stronger in firms with pre-IPO political connections. The effect of political uncertainty on IPO underpricing is also contingent upon the industry and the growth phase of an IPO firm, more pronounced in politically sensitive industries and firms listed on the growth enterprise market board.Originality/valueLocal government officials in China usually have a short tenure and Chinese firms witness significantly severe IPO underpricing. By introducing the SEM model in studying China IPO underpricing, this study identifies the channel through which local government official turnover to political uncertainty on IPO underpricing.

Aktywność G. Juliusza Cezara w Hiszpanii w latach 60-tych I wieku przed Chr.

In the sixties Caesar visited the Further Spain twice, first as quaestor (69–68), then as governor (with the rank of proconsul) in 61. Both stays are extremely important from the point of view of Caesar’s career and the activities carried out in the province. The author of the article examines Caesar’s activities in Spain: both his military actions and his administrative and financial activities. He looks at Caesar’s political connections, both those that brought him to Spain and those he managed to establish in the province.

Politics and city growth in Italy: Do connections matter?

AbstractIn 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.

Does intellectual capital have an impact on company risk and performance?: Effect of moderation political connection

This study looks at the effect of intellectual capital on firm performance and risk as well as the moderating effect of political connections. Companies in the current economic era are required to pay more attention to intangible resources. Intellectual capital is considered as the main intangible asset for companies used to create and use knowledge to increase firm value. The population in this study are non-financial companies listed on the Indonesia Stock Exchange in 2014-2021. The analysis method used in this study uses Moderated Regression Analysis. The study finds that the effect of intellectual capital has a significant effect on firm performance and risk, respectively. The moderating effect also affects the overall performance and market-side risk of the firm. Political connections make corporate decision-making inefficient. Future research can consider industry differences in the relationship of intellectual capital to firm performance and risk. This research has managerial implications, namely companies should consider increasing investment in the development and utilization of intellectual capital. Intellectual capital should be integrated into long-term corporate strategy. The limitations of this study are that the findings of this study are limited to developing countries and the need for more comprehensive measurements for intellectual capital.

The political connection, stakeholders pressure, sustainability reports disclosure, and business risk as moderating variable

The objectives of this research investigated the effect of political connection, stakeholder pressure (environmental pressure, customer’s pressure, employee’s pressure, and foreign pressure) on the sustainability report disclosure and business as a moderating variable. Manufacturing sector companies listed on the Indonesian Stock Exchange for the 2019–2023 periods have a target population. Samples were selected by some criteria, and the 15 manufacturing companies were determined as a sample. The annual report and sustainability report are the sources of the data. To test hypotheses, we are using multiple regression and moderate multiple regression analysis. The employee pressure and environmental pressures do not significantly affect the sustainability report disclosure, while political connections, consumer pressure, and foreign pressure have a significant effect on the sustainability report disclosure. Business risk can moderate the relationship between consumer pressure and sustainability report disclosure, while it cannot moderate the relationship between political connection, environmental pressure, employee’s pressure, and foreign pressure and sustainability reports. The findings of this research have some implications for companies and governments. The company should pay attention to political connections and customer pressure because it can effect a decision related to disclosure of the sustainability reports, and (b) government determines the sustainability report standard.

Effect of government's environmental attention on corporate philanthropy based on the institutional theory: Evidence from China's heavily polluting companies.

The underlying motivation behind corporate philanthropy (CP) is subject to multiple interpretations. For emerging markets, traditional interpretations based on a perspective of interest exchange often fall short. The institutional environment in China is characterized by uncertainty, particularly in the field of environmental protection, where the government's attention, a scarce institutional resource, can influence the behaviors of heavily polluting companies. The government's environmental attention (GEA) may be subject to campaign-style investment, which provides an opportunity for research. This study attempts to use institutional theory to construct a difference-in-differences model using the Central Inspection of Environmental Protection as an exogenous shock. It examines the causal impact of GEA on CP, observing that GEA has a positive effect on CP, especially for large companies, companies in less competitive industries, companies located in high-pollution areas, and companies with high environmental expenditure. The results indicate that campaign-style institutional changes provide a non-transactional political motivation for CP. In addition, we discuss the mechanism, which is the expectation change. Campaign-style institutional changes work by altering corporations' expectations of the future institutional environment. We verify this mechanism from two perspectives, namely, the intensity of changes caused by uncertainty and corporate sensitivity to changes. Our results remain robust when subject to several tests based on different identification hypotheses and alternative measures. Unlike the existing literature on the political connections driving CP in China, this study, based on the institutional theory framework, reveals that campaign-style institutional changes constitute a non-transactional, unidirectional political motivation, which is a significant driving factor for CP in a Chinese context. This study evaluates the importance of GEA and reveals the non-transactional political motivations from the institutional theory perspective. This not only enriches existing discussions on the political motivations of CP but also broadens our understanding of the relationship between institutional uncertainty and CP in emerging markets.

Pengaruh Fraud Hexagon Terhadap Fraudulent Financial Statement pada Perusahaan Sektor Keuangan yang Terdaftar di Bursa Efek Indonesia Tahun 2020 – 2022

This study aims to determine the effect of fraud hexagon on fraudulent financial statements. This research is classified as quantitative research. The sample of this study used financial sector companies listed on the Indonesia Stock Exchange in 2020-2022. In this study, the determination of samples was carried out using purposive sampling technique. The type of data used in this study is secondary data. The results can be concluded that external pressure, financial targets, significant effect on fraudulent financial statements, financial stability, nature of industry, ineffective monitoring, razionalization, capability, arrogance and political connection did not significantly affect the fraudulent financial statements

Rabbenu Tam and Count Henry the Liberal: New Sources

ABSTRACT Recent scholarship has demonstrated the political and intellectual connections between Rabbi Jacob ben Meir (‘Rabbenu Tam’) and Henry the Liberal, Count of Champagne, and his court. Further evidence found in Hebrew manuscript sources serves to fine-tune earlier conclusions and provide new insights regarding the unique nature of the relationship. Rabbenu Tam's rulings on matters of secular governance suggest a positivistic stance toward Henry's rule vis-a-vis baronial authority in the 1150s and 1160s, at a time when Champagne was rapidly developing politically and economically.

Corruption and emigration from the Western Balkans: evidence from a dynamic system GMM model (2012-2022)

According to neoclassical models, migration takes place when there is a strong probability that individuals will recoup their human capital investments. As a result, workers typically move from low-income to high-income areas and the larger the expected income gap between areas, the higher the number of migrants. In countries where corruption is endemic, jobs are often secured through political connections and bribes. This will lead to a higher unemployment level as well as to a lower return to human capital. Consequently, a significant proportion of the population considers emigration as the only path to succeed. The present study is focused on the impact of corruption on emigration from six Western Balkan countries. A System Generalized Method of Moments is estimated to analyze migrant stocks in 28 receiving countries during the period from 2012 to 2022. We suggest that corruption can directly influence migration stocks in receiving countries.

Business deserts politics under weak institutions: evidence from Russia, 2003–2010

Abstract Businesspeople are expected to invest in political connections when the institutions are weak. Using an original dataset from Russia in 2003–2010, we document changes in political connections of the richest businesspeople and show that within the institutional environment of a fledgling autocracy political engagement stops paying off, and the businesspeople retreat from politics. The businesspeople’s political disengagement reveals their insider assessment of the quality of Russian political institutions, indicating that as autocracy consolidated in Russia, its political institutional structure was in decay. This finding contributes to our understanding of authoritarian institutions, suggesting that even though autocracies nowadays might be institutionalized to a much higher degree, in the short-run autocracy is still detrimental to institutionalization.

Biographies and Revisionist Histories in Modern China

Abstract Born and raised in the British Caribbean island colony of Trinidad, Eugene Chen was one of China’s foremost foreign ministers during the early twentieth century, defending his nation’s interests despite its military weakness and political disunity. Relying primarily on newspapers and what he calls the “Eugene Chen Papers,” sourced from Eugene Chen’s grandson in Hong Kong, Walton Look Lai reveals Eugene Chen’s multiple identities, first as “Sun Yat-sen’s personal representative and spokesman in Shanghai,” then as “the global face and voice of the Wuhan regime,” and ultimately as “China’s ‘dynamite’ diplomat [who] challenged the British lion over the Hankow concession and won.” For many, Eugene Chen, for all his political accomplishments and connections to the most illustrious personalities in Republican Chinese history, cut a relatively obscure figure. Eugene Chen’s obscurity points to an old problem in Chinese historiography, or any historiography, for that matter. The privileging or canonization of certain historical figures at the expense of attention to others stems partly from the binary of reform and revolution held by historians when investigating the transformations of twentieth-century China or its transition from empire to nation. Walton Look Lai’s book on Eugene Chen is thus a contribution to our broader historiographical attempt to dismantle the obsolete paradigms that caricature complex historical personalities as one-dimensional persons of their times.