The Political Connection Preferences of Chinese New Energy Vehicle Companies and Their Impacts on Reputation Investments

Abstract

Abstract: The reputation mechanism of new energy vehicle (NEV) companies can effectively reduce unethical behaviors such as cheating and subsidy seeking in Chinese NEV companies. This paper focuses on the degree of political connection, which is the most common close relationship between companies and the government under the background of industrial policy implementation, and uses the propensity score matching method to analyze the influence of political connection preferences of Chinese NEV companies on reputation investments and its stage differences. The results reveal that Chinese NEV companies generally have a preference for establishing political connection that can promote reputation investments of both the government and the public, but the preference has no obvious effect on the reputation investments of consumers. However, with the development of the NEV industry, the positive promoting effect of political connection preferences on reputation investments gradually weakens. Thus, the Chinese NEV industry should exploit use of the positive effect of political connection on reputation investments.

Key words: new energy vehicles(NEVs), political connection preferences, reputation investments, propensity score matching(PSM)

Xiong Yongqing, Zhang Zhijian. The Political Connection Preferences of Chinese New Energy Vehicle Companies and Their Impacts on Reputation Investments[J]. Management Review, 2023, 35(1): 222-232.

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