Political Connections, Local Interests and Environmental Performance

Sheng Yao, Haotian Liang

School of Management, China University of Mining and Technology, Xuzhou, China.

DOI: 10.4236/jhrss.2014.23011                

Abstract

Though there are studies on the relation between political connections and financial performance in the current literature, few have addressed the issue of political connections within the context of the environment. Thus, the goal of this study was to prove, in theory, that political connections and local interests negatively affect the environmental performance in the short and long run under the conditions faced by China.

Keywords

Local Government, Political Connections, Environmental Performance

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	Zhou, L. (2008) The Local Government in Transition: Official Incentive and Governance. Oversea Publishing House, Shanghai.
[2]	Li, Y.F., Li, X.F. and Cai, T. (2009) The Economic Analysis on Government Behavior’s Externality. Economic Science Press, Beijing.
[3]	Li, H.L. (2008) The Analysis of China’s Local Government Environmental Regulation Difficult Problem and Countermeasure Mechanism. Doctoral Dissertation of East China Normal University.
[4]	Zhang, Z.H. (2010) Reducing the Environmental Regulatory Capture Countermeasure Research. Academic Exchange, 2, 74-77.
[5]	Zhou, Y.D. (2004) Interest Groups Theory. Journal of Anhui University (Philosophy & Social Sciences), 7, 106-111.
[6]	Roberts, B.E.A. (1990) Dead Senator Tells No Lies: Seniority and the Distribution of Federal Benefits. American Journal of Political Science, 34, 31-58. http://dx.doi.org/10.2307/2111510
[7]	Fisman, R. ( 2001) Estimating the Value of Political Connections. American Economic Review, 91, 1095-1102. http://dx.doi.org/10.1257/aer.91.4.1095
[8]	Hellman J., Jones, G. and Kaufmann, D. (2003) Seize the State, Seize the Day: State Capture and Influence in Transition Economies. Journal of Comparative Economics, 31, 751-773. http://dx.doi.org/10.1016/j.jce.2003.09.006
[9]	Johnson, S. and Mitton T. (2003) Cronyism and Capital Controls: Evidence from Malaysia. Journal of Financial Economics, 67, 351-382. http://dx.doi.org/10.1016/S0304-405X(02)00255-6
[10]	Faccio, M. (2006) Politically Connected Firms. American Economic Review, 96, 369-386. http://dx.doi.org/10.1257/000282806776157704
[11]	Goldman, E., Rocholl, J. and So, J. (2006) Does Political Connectedness Affect Firm Value? University of North Carolina at Chapel Hill, Chapel Hill.
[12]	Claessens, E., Feijen, E. and Laeven, L. (2008) Political Connections and Preferential Access to Finance: The Role of Campaign Contributions. Journal of Financial Economics, 88, 554-580. http://dx.doi.org/10.1016/j.jfineco.2006.11.003
[13]	Dombrovsky, V. (2008) Do Political Connections Matter? Firm-Level Evidence form Latvia. Stockholm School of Economics in Riga and Baltic International Centre for Economic Policy Studies.
[14]	Pan, H.B., Xia, X.P. and Yu, M.G. (2008) Government Intervention, Political Connections and the Mergers of Local Government-Controlled Enterprises. Economic Research Journal, 4, 41-52.
[15]	Sapienza, P. (2004) The Effects of Government Ownership on Bank Lending. Journal of Financial Economics, 72, 357-384. http://dx.doi.org/10.1016/j.jfineco.2002.10.002
[16]	Khwaja, A.I. and Mian, A. (2005) Do Lenders Favor Politically Connected Firms? Rent Seeking in an Emerging Financial Market. Quarterly Journal of Economics, 120, 1371-1411. http://dx.doi.org/10.1162/003355305775097524
[17]	Dinc, I.S. (2005) Politicians and Banks: Political Influences on Government-Owned Banks in Emerging Markets. Journal of Financial Economics, 77, 453-479. http://dx.doi.org/10.1016/j.jfineco.2004.06.011
[18]	Fan, J.P.H., Rui, M.O. and Zhao, M. (2006) Rent Seeking and Corporate Finance: Evidence from Corruption Cases. The Chinese University of Hong Kong, Hong Kong.
[19]	Hu, X.Y. (2006) Private Entrepreneur’s Political Identity and the Convenience of Private Enterprises—Taking Top100 Private Companies in Zhejiang Province as Examples. Management World, 5, 107-113.
[20]	Boubakri, M., Cosset, J.C. and Saffar, W. (2008) Political Connections of Newly Privatized Firms. Journal of Corporate Finance, 14, 654-673. http://dx.doi.org/10.1016/j.jcorpfin.2008.08.003
[21]	Dewenter, K.L. and Malatesta, P.H. (2001) State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage and Labor Intensity. American Economic Review, 91, 320-334. http://dx.doi.org/10.1257/aer.91.1.320
[22]	Chen, D.H., Fan, J.P.H. and Wong, T.J. (2004) Politically-Connected CEOs, Corporate Governance and Post-IPO Performance of China’s Newly Partially Privatized Firms. Hong Kong University of Science and Technology, Hong Kong.
[23]	Bertrand, M., Kramarz, F., Schoar, A., et al. (2006) Politicians, Firms and Political Business Cycle: Evidence from France. University of Chicago, Chicago.
[24]	Chang, E.C. and Wong, S.M.L. (2004) Political Control and Performance in China’s Listed Firms. Journal of Comparative Economics, 32, 617-636. http://dx.doi.org/10.1016/j.jce.2004.08.001
[25]	Cheung, Y.L., Jing, L.H., Raghavendra, R.P., et al. (2005) Guanxi, Political Connections and Expropriation: The Dark Side of State Ownership in Chinese Listed Companies. City University of Hong Kong, Hong Kong.
[26]	Aggarwal, R.K., Meschke, F. and Wang, T. (2007) Corporate Political Contribution: Investment or Agency? University of Minnesota, Minneapolis and Saint Paul.
[27]	Ball, R., Kothari, S.P. and Robin, A. (2000) The Effect of Institutional Factors on Properties of Accounting Earning: International Evidence. Journal of Accounting and Economics, 17, 137-166.
[28]	Wu, W.F., et al. (2010) Ownership and the Value of Political Connections. Working Paper.
[29]	Guo, D.Y. (2008) The Outline of Establishment of the Second System of Accounting Reports. Accounting Learning, 4, 14-16.
[30]	Coatanza, R., Arge, R., Groot, R., et al. (1997) The Value of the World’s Ecosystem Service and Nature Capital. Nature, 386, 253-260. http://dx.doi.org/10.1038/387253a0