Do Political Connections Help Privately Owned Chinese Enterprises Go Global?

Abstract

This paper explores how political connections can influence the likelihood of “going global” by assisting privately owned enterprises (POEs) in China to complete cross-border acquisitions. Using a sample of Chinese POEs from 2007 to 2016, we show that politically connected POEs are more likely to acquire foreign companies and to have outsize financial performance than domestic POEs in the three years after beginning the globalization process. We also find that multinational POEs in China exhibit better corporate governance.