Making use of the data of Chinese A-share listed companies from 2007 to 2012, this paper studies the impact of local political power transition on investment cycle of corporate social capital from the perspective of the reconstruction of government-enterprise relations. It arrives at the conclusions as follows:firstly, enterprises significantly improve the social capital investment in the year of local political power transition, and with the increase in the tenure of chief officials, corporate social capital investment shows a decreasing trend; that is to say, corporate social capital investment has a cyclical characteristic of increasing first and then decreasing during the tenure of chief officials; and this cyclical characteristic exists only in private enterprises; secondly, the cyclical characteristic of social capital investment in private enterprises is more significant in the sample groups of local officials coming from a different city, longer expected tenure of successor officials, regulatory industries, firms with high financial constraints, and firms without political connections; thirdly, in the year of local political power transition, the increase in corporate social capital investment provides private firms with the advantage of gaining government subsidies, but this advantage cannot be exerted at once; meantime, the increase in corporate social capital investment also leads to a crowding-out effect on their own R & D investment, and this crowding-out effect lasts during the whole tenure of successor officials. It provides a new perspective for the understanding of means, process and effectiveness of establishing government-enterprise relations.
Local Political Power Transition and Investment Cycle of Corporate Social Capital: Dynamic Research Based on the Reconstruction of Government-enterprise Relations
Journal of Finance and Economics Vol. 43, Issue 01, pp. 4 - 16 (2017) DOI:10.16538/j.cnki.jfe.2017.01.001
Cite this article
Cao Wei, Yang Deming, Zhao Can, et al. Local Political Power Transition and Investment Cycle of Corporate Social Capital: Dynamic Research Based on the Reconstruction of Government-enterprise Relations[J]. Journal of Finance and Economics, 2017, 43(1): 4–16.
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