Three essays on connections and corporate governance: Evidence from China

Zusammenfassung

The field of political connections and corporate governance is not a novelty per se. I am indebted to an extensive literature (Cohen et al., 2008; Faccio et al., 2006; Fisman, 2001). I measure connections to the political elite -the 25 top members of the Chinese Politburorelying on past educational links of the directors or CEOs. Several scholars have used similar proxies of connections in the United States (Do et al., 2016; Engelberg et al., 2012; Faleye et al., 2014; Fracassi and Tate, 2012; Hwang and Kim, 2009), in France (Nguyen, 2012), or in Korea (Schoenherr, 2019). The educational proxy had not been explored in China in the context of corporate governance research. Thus, I revisit the relationship between connections and corporate governance, focusing on connections to the elite. The elite is composed in the three essays by the 25 political leaders in the Chinese Communist Party (CCP), a huge organization with more than 90 million members. The elite can ease access to key resources, block agreements, or assure job placements in an exchange of power and money. In a country like China, where economic growth has been the trend in the past decades, political elites have both career and financial incentives to encourage these exchange of resources (Ang, 2020). China provides me with the data and institutional setting to study the role of connections to the political elite.