The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms

Zhuwei Li; Sennan Liu; Shunyao Wang; Baolu Wang

doi:doi:10.11648/j.ijefm.20190701.16

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The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms

Zhuwei Li, Sennan Liu, Shunyao Wang, Baolu Wang

Published in International Journal of Economics, Finance and Management Sciences (Volume 7, Issue 1)

Received: 10 January 2019 Accepted: 12 March 2019 Published: 29 March 2019

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Abstract

Sample data were acquired from Chinese listed private enterprises. Then, the random effect model of panel data was used to establish a regression model of business performance and firm financial connection and examine the relationship between them. Results showed that the higher the degree of private enterprise financial connection, the worse the business performance of the enterprise. In other words, financial connection provides financing convenience, but it cannot improve business efficiency. We also classified the sample enterprises according to size and found that financial connection has a greater negative impact on the performance of small-scale firms compared with large-scale ones. Moreover, dividing the sample enterprises according to the degree of financial marketization in the location of the sample enterprises indicated that financial connection has a negative effect on the performance of private enterprises in areas with low degree of financial marketization. The classification of financial connection also revealed that non-bank financial connection exerts a greater negative impact on corporate performance than bank financial connection.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 7, Issue 1)
DOI	10.11648/j.ijefm.20190701.16
Page(s)	29-36
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Financial Connection, Business Performance, Private Enterprise, Panel Data

References

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APA Style

Zhuwei Li, Sennan Liu, Shunyao Wang, Baolu Wang. (2019). The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms. International Journal of Economics, Finance and Management Sciences, 7(1), 29-36. https://doi.org/10.11648/j.ijefm.20190701.16

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ACS Style

Zhuwei Li; Sennan Liu; Shunyao Wang; Baolu Wang. The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms. Int. J. Econ. Finance Manag. Sci. 2019, 7(1), 29-36. doi: 10.11648/j.ijefm.20190701.16

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AMA Style

Zhuwei Li, Sennan Liu, Shunyao Wang, Baolu Wang. The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms. Int J Econ Finance Manag Sci. 2019;7(1):29-36. doi: 10.11648/j.ijefm.20190701.16

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@article{10.11648/j.ijefm.20190701.16,
  author = {Zhuwei Li and Sennan Liu and Shunyao Wang and Baolu Wang},
  title = {The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {7},
  number = {1},
  pages = {29-36},
  doi = {10.11648/j.ijefm.20190701.16},
  url = {https://doi.org/10.11648/j.ijefm.20190701.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20190701.16},
  abstract = {Sample data were acquired from Chinese listed private enterprises. Then, the random effect model of panel data was used to establish a regression model of business performance and firm financial connection and examine the relationship between them. Results showed that the higher the degree of private enterprise financial connection, the worse the business performance of the enterprise. In other words, financial connection provides financing convenience, but it cannot improve business efficiency. We also classified the sample enterprises according to size and found that financial connection has a greater negative impact on the performance of small-scale firms compared with large-scale ones. Moreover, dividing the sample enterprises according to the degree of financial marketization in the location of the sample enterprises indicated that financial connection has a negative effect on the performance of private enterprises in areas with low degree of financial marketization. The classification of financial connection also revealed that non-bank financial connection exerts a greater negative impact on corporate performance than bank financial connection.},
 year = {2019}
}

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TY  - JOUR
T1  - The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms
AU  - Zhuwei Li
AU  - Sennan Liu
AU  - Shunyao Wang
AU  - Baolu Wang
Y1  - 2019/03/29
PY  - 2019
N1  - https://doi.org/10.11648/j.ijefm.20190701.16
DO  - 10.11648/j.ijefm.20190701.16
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 29
EP  - 36
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20190701.16
AB  - Sample data were acquired from Chinese listed private enterprises. Then, the random effect model of panel data was used to establish a regression model of business performance and firm financial connection and examine the relationship between them. Results showed that the higher the degree of private enterprise financial connection, the worse the business performance of the enterprise. In other words, financial connection provides financing convenience, but it cannot improve business efficiency. We also classified the sample enterprises according to size and found that financial connection has a greater negative impact on the performance of small-scale firms compared with large-scale ones. Moreover, dividing the sample enterprises according to the degree of financial marketization in the location of the sample enterprises indicated that financial connection has a negative effect on the performance of private enterprises in areas with low degree of financial marketization. The classification of financial connection also revealed that non-bank financial connection exerts a greater negative impact on corporate performance than bank financial connection.
VL  - 7
IS  - 1
ER  -

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Author Information

Zhuwei Li

Faculty of Management and Economics, Dalian University of Technology, Dalian, China
Sennan Liu

Faculty of Management and Economics, Dalian University of Technology, Dalian, China
Shunyao Wang

Faculty of Management and Economics, Dalian University of Technology, Dalian, China
Baolu Wang

Faculty of Management and Economics, Dalian University of Technology, Dalian, China

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Plain Text BibTeX RIS

APA Style

Zhuwei Li, Sennan Liu, Shunyao Wang, Baolu Wang. (2019). The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms. International Journal of Economics, Finance and Management Sciences, 7(1), 29-36. https://doi.org/10.11648/j.ijefm.20190701.16

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ACS Style

Zhuwei Li; Sennan Liu; Shunyao Wang; Baolu Wang. The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms. Int. J. Econ. Finance Manag. Sci. 2019, 7(1), 29-36. doi: 10.11648/j.ijefm.20190701.16

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AMA Style

Zhuwei Li, Sennan Liu, Shunyao Wang, Baolu Wang. The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms. Int J Econ Finance Manag Sci. 2019;7(1):29-36. doi: 10.11648/j.ijefm.20190701.16

Copy | Download

@article{10.11648/j.ijefm.20190701.16,
  author = {Zhuwei Li and Sennan Liu and Shunyao Wang and Baolu Wang},
  title = {The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {7},
  number = {1},
  pages = {29-36},
  doi = {10.11648/j.ijefm.20190701.16},
  url = {https://doi.org/10.11648/j.ijefm.20190701.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20190701.16},
  abstract = {Sample data were acquired from Chinese listed private enterprises. Then, the random effect model of panel data was used to establish a regression model of business performance and firm financial connection and examine the relationship between them. Results showed that the higher the degree of private enterprise financial connection, the worse the business performance of the enterprise. In other words, financial connection provides financing convenience, but it cannot improve business efficiency. We also classified the sample enterprises according to size and found that financial connection has a greater negative impact on the performance of small-scale firms compared with large-scale ones. Moreover, dividing the sample enterprises according to the degree of financial marketization in the location of the sample enterprises indicated that financial connection has a negative effect on the performance of private enterprises in areas with low degree of financial marketization. The classification of financial connection also revealed that non-bank financial connection exerts a greater negative impact on corporate performance than bank financial connection.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - The Relationship Between Financial Connections and Business Performance of Private Enterprises: Evidence from Chinese Listed Firms
AU  - Zhuwei Li
AU  - Sennan Liu
AU  - Shunyao Wang
AU  - Baolu Wang
Y1  - 2019/03/29
PY  - 2019
N1  - https://doi.org/10.11648/j.ijefm.20190701.16
DO  - 10.11648/j.ijefm.20190701.16
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 29
EP  - 36
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20190701.16
AB  - Sample data were acquired from Chinese listed private enterprises. Then, the random effect model of panel data was used to establish a regression model of business performance and firm financial connection and examine the relationship between them. Results showed that the higher the degree of private enterprise financial connection, the worse the business performance of the enterprise. In other words, financial connection provides financing convenience, but it cannot improve business efficiency. We also classified the sample enterprises according to size and found that financial connection has a greater negative impact on the performance of small-scale firms compared with large-scale ones. Moreover, dividing the sample enterprises according to the degree of financial marketization in the location of the sample enterprises indicated that financial connection has a negative effect on the performance of private enterprises in areas with low degree of financial marketization. The classification of financial connection also revealed that non-bank financial connection exerts a greater negative impact on corporate performance than bank financial connection.
VL  - 7
IS  - 1
ER  -

Copy | Download