Loss of political connections and innovation: the case of listed Chinese companies

This article examines the link between the loss of political connections and innovation in China. Findings indicate that the loss of political connections is positively associated with investment and innovation outcomes, and that this positive effect is more significant when firms are non-state owned or based in regions where government intervention is high. Furthermore, this effect is greater when these actors are senior politicians, still in political office or have a longer career, and when companies employ politician-managers over a longer period or more frequently. We also find that overinvestment plays a mediating role. Together, these findings offer a new perspective on corporate decision-making.