Abstract
Can political connections bring about government benefits? Investigating the firms publicly listed on the Chinese stock, we find that political connections in family-controlled firms are associated with better accesses to bank loans, less tax payments and more government subsidies. We further find that political connections can result in higher stock returns in the Chinese family-controlled firms. We argue that political connections bring about rents for the family-controlled firms under poor institutional environment, which increases corporate value at the cost of social
welfares.
