A Research On The Influence Of Debt Financing On Enterprise Investment Behavior Based On Political Connections Perspective

Financing and investing activities are both important financial activities of enterprise,they are not only independent but also related to each other,and to be bound by a commoncause. As a crucial source of enterprise finance,debt financing exerts far-reaching influenceon enterprise investment behavior. So since the1970s, the influence of debt financing oncorporate investment behavior has become the focus in the theoretical circle.The westernshave accumulated a lot of literatures around the influence that debt financing exerts onenterprise investment behavior,however, we continue to research this problem is notwithout its value, it is because the special institutional background in china makes the waydebt financing to influence enterprise investment behavior happen great changes. Based onthis, to explore the influence of debt financing on corporate investment behavior underChinese Particular situation is of great significance.Enterprise political connections is one of the important performance of Chinesespecial institutional background,so this paper uses principal-agent theory, informationasymmetry etc as theory basis and takes the current situation of Chinese financing andinvestment into account to further research how debt financing influences corporateinvestment behavior from the breakthrough point of political connections,combining boththeoretical and empirical methods.This paper makes three conclusions as follows:Firstly,the corporation that have political connections are much easier to obtain debtfinancing from banks than those have no political connections.Secondly,debt financingmore easily results in non-efficiency investment under the action of politicalconnections.Lastly,debt financing is more inclined to cause over-investment compared withunder-investment.