Political Connections, Productivity and Firm Sales

20 Pages Posted: 27 May 2020

See all articles by Gal Hochman

Gal Hochman

Rutgers University; University of California, Berkeley

Chrysostomos Tabakis

KDI School of Public Policy and Management

Shun Wang

KDI School of Public Policy and Management

Na Zhang

Fudan University - Department of Finance

Date Written: April 29, 2020

Abstract

We explore the significance of political connections vs. productivity for firms’ domestic sales and export performance in developing countries, using the data from the listed firms in China’s Shanghai and Shenzhen stock markets. We estimate firms’ total factor productivity and manually build a detailed dataset on firm’s political connections using public information released by firms. We find that more productive firms have larger sales in both domestic and international markets, but the effect of political connections differ. Political connections matter in a positive way for domestic sales, and employing a current member of a political body in China is more significant for domestic sales than employing a former government official. However, political connections are not significant for firm’s export sales.

Suggested Citation

Hochman, Gal and Tabakis, Chrysostomos and Wang, Shun and Zhang, Na, Political Connections, Productivity and Firm Sales (April 29, 2020). KDI School of Pub Policy & Management Paper No. 20-08, Available at SSRN: https://ssrn.com/abstract=3588210 or http://dx.doi.org/10.2139/ssrn.3588210

Gal Hochman

Rutgers University ( email )

New Jersey
United States
(848) 932-9142 (Phone)

HOME PAGE: http://hochman.rutgers.edu

University of California, Berkeley ( email )

340 Giannini Hall
University of California, Berkeley
Berkeley, CA 94720
United States
(510) 289-0907 (Phone)

HOME PAGE: http://nature.berkeley.edu/~ghochman/

Chrysostomos Tabakis

KDI School of Public Policy and Management ( email )

P.O. Box 184
Seoul, 130-868
Korea, Republic of (South Korea)

Shun Wang (Contact Author)

KDI School of Public Policy and Management ( email )

P.O. Box 184
Seoul, 130-868
Korea, Republic of (South Korea)

Na Zhang

Fudan University - Department of Finance ( email )

Shanghai, 200433
China

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