Establishing links between business and government is a common phenomenon in the world. Using data of new energy companies listed in Shenzhen and Shanghai Stock Exchange，the paper examines the relationship between political connection and firms’ over-investment. We find that executives political connection is a significant promotion of firms’ over-investment; the political connection is divided into the central- and local-level, and further tests find that political connections with different levels have no significant impact on firms’ over-investment. Our findings provide an empirical evidence for strengthening the Governance Reform of the government.
Wang, Zhenyi; Tang, Hanhan; and Wu, Shaohong, "Executives Political Connection and Over-investment in New Energy Companies：Empirical Evidence from China's Capital Market" (2015). WHICEB 2015 Proceedings. 58.