Can Managers' Short-Sightedness Be Reversed Through Close and Clean Business-government Relationships?
Journal: Modern Economics & Management Forum DOI: 10.32629/memf.v5i2.1981
Abstract
This research uses a sample of Chinese listed firms from 2017 to 2020 to empirically evaluate, based on institutional theory, the influence of close and clean government-business relationships on managers' shortsighted conduct. Close and clean government-business relationship can effectively inhibit managers' short-sighted behavior, and both close government-business relationship and clean government-business relationship can effectively inhibit managers' short-sighted behavior. Government services are mostly employed in the closeness aspect to encourage managers to create long-term goals, and in the cleanness aspect to restrain managers' opportunistic behavior through government integrity and transparency. Managers' shortsighted behavior is inhibited by close and clean government-business relationships, and this effect is especially pronounced in state-owned firms where institutional investors own a significant number of the shares.
Keywords
business-government relationships, close and clean business-government relationships, managers' short-sightedness
Funding
The project initiated by Hunan Provincial Audit Office: A collaborative study on the integration of Audit Supervision with Intra-Party Supervision and Administrative Supervision (Project Number: 23SJYB0301)
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[2]Hull R. M.,Kwak S.,Walker R. L. Insider Behavior and Ｒ＆D Changes around Seasoned Equity Offerings [J]. Journal of Economics＆ Finance, 2016,40(2):258-276.
[3]Shleifer, A.,Vishny, R. W. Equilibrium Short Horizons of Investors and Firms Equilibrium Short Horizons of Investors and Firms[J]. The American Economic Review, 1990, 80(2):148-153.
[4]Lundstrum, L. L. Corporate investment myopia: a horserace of the theories[J]. Journal of Corporate Finance, 2002, 8(4), 353-371.
[5]Knoeber, C. R. Golden Parachutes, Shark Repellents, and Hostile Tender Offers Golden Parachutes, Shark Repellents, and Hostile Tender Offers[J]. The American Economic Review, 1986, 76(1),155-167.
[6]LI Bingxiang, XUE Sishan。 Analysis of the corporate investment myopia under managerial entrenchment [J]. Systems Engineering-Theory & Practice, 2008(11):55-61.
[7]Narayanan, M. P. Managerial Incentives for Short-term Results[J]. The Journal of Finance, 1985, 40(5),1469-1484.
[8]Baker M, Stein JC, Wurgler J. When does the market matter? Stock prices and the investment of equity-dependent firm[J]. Quarterly Journal of Economics, 2003,118(3):969-1005.
[9]Zhuang Xudong, Zhang Yifei. Research on Effects of New Government-Bus iness Relationship on Investment Efficiency Governance: Empirical Evidence from China's A-Share Market [J]. Securities Market Herald, 2021,31(12):66-76.
[10]WEI Jiang, ZHAO Qiyu, LIU Yang. The new type of government-business relationship and corporate performance stability: Evidence from Chinese listed companies [J]. Journal of Industrial Engineering /Engineering Management,2021,35(4):1-13.
[11]JIANG Yan-jun. The New Type of Political and Business Relationship and Competitive Advantage of Enterprises [J]. Review of Industrial Economics,2020,8(5):48-62.
[12]JIANG Yanjun. Can the Pro-Qing Government-business Ｒelationship Affect Firm Performance:A Study Based on the Tenth Survey of the Private Enterprises All over China, [J]. Journal of Southwest Jiaotong University(Social Sciences), 2021,22(2):113-122.
[13]GUAN Kao-lei. Will the Intimate and Clean Relationship between Politics and Business Affect Corporate Innovations? Empirical Evidences from China’s Listed Companies [J]. Contemporary Finance & Economics. 2019, (6):130-141.
[14]QIU Shi, ZHAO Hui. The Implementation of Political Responsibility in Contemporary China [J]. Journal of East China Normal University(Humanities and Social Sciences,2015,47(6):112-116+168.
[15]WANG Xianbin, HUANG Liangxiong, DONG Yijun. The Investment Effect of Anti － corruption: Evidence from Ｒegional and Enterprises Dimensions [J]. Journal of Financial Research, 2017(9):67-82.
[16]Li Houjian, Zhang Jian. Corruption and Firm Innovation: A Grease or Stumbling Block Relationship [J]. Nankai Economic Studies.2015,(2):24-58.
[17]TONG H, XIAO H. Political connections impairs enterprise innovation: an empirical study based on Chinese private listed enterprises[J]. International journal of economics and finance, 2019, 11(7): 1-12.
[18]HU Fan, ZOU Xin-yue, WU Yao-yao. Long-term Institutional Investors and Stock Price Crash Risk [J]. Journal of Hunan University of Science and Technology(Social Science Edition), 2023,26(2):81-90.
[19]ZHANG Hongliang, ZHOU Yutong, WANG Jingyu. Institutional Investor Shareholding and Enterprise Innovation Quality — Research Based on the Nonlinear Perspective[J]. Journal of Nanjing Audit University,2023,20(1):49-59.
[20]Cui Xiaolei, Gao Tao, Xu Longbing. The Impact of Investor Short-horizon on the Long-term Investment of Companies: Based on Manager Catering Mechanism. [J]. Journal of Finance and Economics, 2022,48(8):154-169.
[21]CHEN X, CHENG Q, Lo A, et al. CEO Contractual Protection and Managerial Short-Termism[J]. American Accounting Association, 2015, 90(5):1871-1905.
[22]CAO Guohua, YANG Junjie, LIN Chuan. CEO reputation and investment myopia behavior [J]. Journal of Industrial Engineering and Engineering Management, 2017,31(4):45-51.
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