Original Article

China Accounting and Finance Review

, 16:22

First online:

Open Access This content is freely available online to anyone, anywhere at any time.

Do Politically Connected Independent Directors Help Chinese Listed Private Firms Enter High-Barrier Industries?1

  • Xingqiang DuAffiliated withDepartment of Accounting, School of Management, Xiamen University
  • , Quan ZengAffiliated withDepartment of Accounting, School of Management, Xiamen University
  • , Yingjie DuAffiliated withDepartment of Accounting, School of Management, Shanghai University Email author 

Abstract

On the basis of hand-collected data on political connections, this study examines the impact of politically connected independent directors on Chinese listed private firms’ entry into high-barrier industries. Our findings reveal the following: (1) politically connected independent directors are significantly positively associated with the likelihood and the degree of Chinese listed private firms’ entry into high-barrier industries; (2) in comparison with politically connected chief executive officers (CEOs), the influence of politically connected independent directors on Chinese listed private firms’ entry into high-barrier industries is more pronounced in terms of both statistical and economic significance; (3) the rank of politically connected independent directors is significantly positively associated with the likelihood and the degree of Chinese listed private firms’ entry into high-barrier industries; (4) both the central- and local-level political connections of independent directors significantly impact the likelihood and the degree of Chinese listed private firms’ entry into high-barrier industries; (5) the influence of politically connected independent directors on the likelihood and the degree of Chinese listed private firms’ entry into high-barrier industries is greater than that of politically connected CEOs regardless of the rank and the level of political connections. Our study extends the extant literature on political connections.

Keywords:

Independent Directors CEOs Political Connections High-Barrier Industries