Political Connection, Management Promotion and Risk Taking Activities

Abstract

This paper investigates how political connection and management promotion affect chances of risk-taking activities, in order to offer theoretical support for state-owned enterprises to select optimal managers, and to maintain and increase their company values. Using the data of chairman of state-owned listed enterprises in Shenzhen securities market, we find that in state-owned listed enterprises, the shorter the pyramid of listed enterprises to ultimate shareholders is, the closer the political connection is, the more likely the chairman is to take up risk-taking activities for pro- motion. While for the same pyramid, the longer the tenure of chairman, the more chances of risk- taking activities.