Abstract
This paper explores the relationship between various forms of political capital and the private equity placement of publicly listed PSEs. The results show that the political capital of PSEs can significantly affect PEP in the processing time, approval results and scale of financing. Specifically, implicit political capital can significantly shorten the processing time, but cannot significantly affect the approval results; however, both partial state ownership and political participation can significantly increase the approval rating. Moreover, partial state ownership has the most powerful effect on the scale of financing. In addition, the analysis of the impact of different levels of entrepreneurs’ political identity on PEP applications reveal that as the level of political identity increases, the PEP approval rate is higher.
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No potential conflict of interest was reported by the author(s).
Notes
1 In fact, China should have a more hidden political capital. Some private entrepreneurs may only be superficial agents, while others influence the business, which will lead to political connections in more complex forms of either personal relationship, or partial stakes 'donation', a more sophisticated form of rent seeking disguised in corporate structure. However, although these effects exist, we are unable to collect data, so in this article, this implicit political capital has not been studied.
2 The indicator PI in the previous article measures the identity of the CPC, CPPCC and Party members of entrepreneurs or corporate executives. The CPC and CPPCC members have level attribute and can be effectively distinguished. However, Party member does not have level attribute and cannot be distinguished. Therefore, this assignment method mainly focuses on the identity of the CPC and CPPCC members of entrepreneurs or corporate executives.
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Notes on contributors
Yedong Feng
Yedong Feng is a Ph.D. candidate of Economics Department at Chongqing University. His research interests are in corporate governance issues.
Ciheng Song
Ciheng Song is a MPAcc student of Whitman School of Management at Syracuse University. Her research focuses on the financial accounting issues.
Baili Yang
Baili Yang is a Ph.D. candidate of Finance Department at Chongqing University. His research interests include corporate finance and SOEs reform issues.