The Study On The Impact On Financing Capacity Of Chinese POEs From Political Conneciton

Private owned Enterprises (POEs) have became an important engine to pushChinese economy keep developing, however, with intangible political blocks, thefinancing trouble for POEs still not be resolved. Especially, for POEs, who arerunning in regulated industries and registered in area where marketization of creditresource distribution is low, the political regulation still is a main block to forbidPOES to get financing resources. For equipped their companies with financialresources, the entrepreneurs attend political event and give suggestion to governmentactively, and right now there is a strong team who is consisted of entrepreneurs withpolitical background who own POEs, and their political relationships make theirPOEs become companies with political connection. How political connectioninfluence on financing capacity of POEs? What is the internal mechanism of thatinfluence? And how factors that industrial regulation and regional variation adjustthat influence? The answers for questions can not only give reasonable explanationfor internal mechanism of relationship between government and POEs, but also givesuggestions to POEs for increasing financing capacity reasonable. So there aresignificances from both theory and practice points of views.In this dissertation POEs are main research objectives, the financial constraintand long term financial variances are proxies for financing capacity, the informationasymmetry and rent-seeking theories are employed for exploring internal mechanismof influence on financial capacity from political connection, and adjusting impacton that influence from industrial regulation and regional variation. There are benefitsof research to this issue: in one aspect, POEs can take political connection as ameasure to increase their financing capacity; in another aspect, government shouldreinforce management ability to make balance both improving financing environmentfor POEs and avoiding rent-seeking and corruption. So not only this subject is animportant theory issue, but it is a practice issue in progress of Chinese economicreform.The basic logic of this dissertation is that, the political connection impact onfinancing capacity of POEs through information asymmetry mechanism or rent-seeking mechanism; there are both long term and short term financing capacitiesof POEs, the short term financing capacity can be proxies by financial constraint, andthe long term financing capacity can be proxies by growth rate and capital structure;industrial regulation and regional variation are two important adjusting factors inabove influence progress. There are eight chapters in this dissertation: the firstchapter is introduction, there are many issues are introduced in this chapter such asresearch backgrounds, significances, Constance, methods, innovations, core concepts.The second chapter is summarization of theories, the main theories motioned in thisdissertation are political connection, financial constraint, and market entrance, andthrough summarization the theoretical points that can be improved are found. Thethird chapter is analysis to institutional background and construction of theory model,in this chapter, based on institutional economics, the growth progress of POEsaccompanied by institution transaction is discussed, with Chinese financialenvironment, the embodied mechanism of political connection is analyzed, and thencombined theories and practices, the theoretic system of this dissertation is given. Thefourth chapter is game model analysis of influence on financial constraint frompolitical connection, in this chapter, both information asymmetry and rent-seekingtheories are employed to construct game models which are taken to explain theinfluence on financial capacity of POEs from political connection. The fifth chapter isempirical study of influence on financial constraint from political connection, in thischapter, the proxies of political connection, financial constraint, industrial regulationand regional variation are selected, then the regression models are build, data areemployed for empirical test. The sixth chapter is robust analysis, the controversialcore concepts that political connection, industrial regulation and regional variation arediscussed deeply, the substituted variables are taken to test the robust of theoriesproposed in this dissertation. The seventh chapter is the long term effect of politicalconnection to financing capacity of POEs, the accumulation of short term influenceleads the discrepancies in growth rate and capital structure aspects, in this chapter, thesignificant of above discrepancies are empirical tested. The chapter eight isconclusion and prospect, based on summarization of whole dissertation, theconclusions are presented, then the defects are given and prospects are made. Both normative study and empirical study methods are taken: in normative studyaspect, the political connection, financial constraint, and market entrance theories aresummarized, then based on information asymmetry and rent-seeking theories, thegame model that political connection influence to financial capacity of POEs arebuild. In empirical study aspect, the theories are tested with descriptive statistics,multiple regression and quantitative analysis methods.Through research following conclusions are made:(I) with background ofChinese transition economy, the financing dilemma are leaded by both politicalfactors and self factors of POEs.(II) the mechanisms that political connection impacton financial constraint of POEs are decreasing information asymmetry andrent-seeking.(III) from short term point of view, the financial constraint degree ofPOEs with political connection is lower, and this influence is adjusted by bothindustrial regulation and regional variation factors, in generally, the effect will bemore significant for POEs running in regulated industries and low level marketizationregion.(IV) from long term point of view, the growth rate, leverage rate and longterm debt rate are higher for political connected POEs.The main innovations are as follow:(I) import political factor in to analysis toinvestment and financing of POEs; Build analysis frame of political connection tofinancing capacity of POEs; based on information asymmetry and rent-seekingtheories, discuss internal logic of influence from political connection on financialcapacity.(II) analyze to both short term impact and long term accumulation resultfrom political connection to financial capacity of POEs, based on that the lineamentof influence from political connection to financial capacity is got into shape.(III)based on market entrance theory, analyze the difference of regulation power ofgovernment, then analyze the adjusting effect to influence of political connection onfinancial capacity of POEs from both industrial regulation and regional variancefactors.