Abstract: Taking China’s private listed companies during the period of 2006-2011 as the samples, this paper conducts an empirical study of how political connection of private enterprises influencing their cost of maintaining such political connection and how the cost of political connection affecting their obtaining of the financial subsidies, so as to further clarify the internal mechanism of the influence of political connection on the enterprises’ access to government resources. The results indicate that the political connection of private enterprises would indeed bring certain political connection cost, and the higher the degree of connection between the private enterprises and the government, the higher the connection cost would be; while the higher the connection cost is, the more financial subsidies they can gain from the government.

Key words: private enterprise; political connection; political connection costs; financial subsidies