The Value of Implicit Political Connections

David Broadstock, Xiaoqi Chen, C. S. Agnes Cheng, Wenli Huang

Research output: Contribution to journalArticlepeer-review


We investigate whether the aggregated political relations of a firm’s top management team (TMT) add value to the firm’s performance. We distinguish between the political relations that arise from TMT’s own work experience, which are termed direct political connections (DPC), and the relations that TMT develops from working for the same institution with the government officials, which are termed implicit political connections (IPC). We find that IPC are positively associated with firm performance and that they often have a stronger effect than DPC do. We also find that the effect of IPC on firm value is stronger in SOEs and in firms located in under-developed provinces. Moreover, we find that after the anti-corruption campaign, the effect of DPC decreases but the effect of IPC does not significantly change. Overall, our results suggest the importance of investigating a firm’s aggregated political connections, especially its IPC.

Original languageEnglish
Pages (from-to)1-18
Number of pages18
JournalJournal of International Accounting Research
Issue number2
Publication statusPublished - 1 May 2020
EventWinner of the Best Paper Award of the Journal of International Accounting Research -
Duration: 11 Jun 202211 Jun 2022


  • Direct political connections
  • Firm performance
  • Implicit political connections


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