The Importance of Being Politically Connected (2015–2018)
Greasing the political wheels is a well-known mechanism for accessing government contracts, acquiring
resources and influencing policies. For a firm operating in an inefficient market these connections are vital to
increasing the value of the firm, despite the potentially damaging effects of the misallocation of resources.
Unfortunately, the literature on the importance of political connections and their value implications is scant. In
this project, we develop a framework that depicts the interplay of political connections, institutional factors,
corporate governance, media coverage and firm value. In particular, we investigate how political connections
enhance the value of firms in China and how this changes as the market transitions.