Research on the relationship between

political relations and corporate value:

Take the top 500 companies in China in
2014 as an example
Chao Jin Yi
Research motivation and purpose

• Political relations are a common phenomenon in all countries of the world. Whether in
developed or developing countries, political relations are one of the important factors
affecting social and economic activities, especially in the development of imperfect legal
systems. The market has a more pronounced impact (Faccio 2006).

• Since China introduced reform and opening up in 1978, it has become one of the largest
investment markets in the world. The Chinese government has strong control over its
economic development strategy and has a large amount of social resources. In order to
obtain more government support and Resources and the motivation to establish political
relations are also increasing.
Research motivation and purpose

• The evaluation of enterprise value is the product of the development of market economy.
With the vigorous development of property rights trading activities such as mergers and
acquisitions, restructuring, and equity transactions, the enterprise that originally produced
the product itself can also become a commodity, which can be evaluated and traded in
the market. The value of an enterprise is mainly divided into two parts: equity capital value
and debt value. Under the condition of constant capital structure, the greater the value of
the enterprise, the higher the value of the stock, so it can be known that the value of the
enterprise value can be reflected in the stock. The value of it. If the company's interest
rate risk and default risk are smaller, the market price fluctuations will be smaller.
Therefore, the value created by the company can be verified in the market.
research problem

• First, this study wants to understand whether there is a significant difference in the value
of enterprises between state-owned enterprises and private enterprises because of the
different types of final controllers.

• Second, this study wants to understand whether, among state-owned enterprises, those
with non-central political backgrounds have significant differences in their corporate value
compared to those with a central government background.

• Third, this study wants to understand whether in a private enterprise, there is a significant
difference in the value of a company with political relations compared to those without
political relations.