Exploring Corporate Political Activity (CPA) in China

Abstract

This paper focuses on the utilization of corporate political activity (CPA), which is an important cultural and social element in China, and the impact of CPA on firm performance. This research proposes that corporate political activity (CPA), in the forms of lobbying, co-optation and China-specific political connections, increases a firm’s political influence, and hence secures firms’ legitimacy in regulatory aspects. CPA is positively related to firm performance, including reduced uncertainty, reduced transaction costs and increased long-term sustainability.