Research On The Impact Of Political Connection On External Financing Of Private Listed Companies

At present, private listed companies have widespread financing problems, whichhave hindered the rapid development of private enterprises. Using political connection toget financing support is an effective way to alleviate the financing difficult problem forprivate listed companies. This paper researches the impact of political connection onexternal financing of private listed companies, in order to enrich the theory of study on theimpact of political connection on private listed companies, and to provide guidance toalleviate the financing difficulties of private listed companies.First of all, based on reviewing the relevant literature of the impact of politicalconnection on private listed companies, this paper defines the related concepts andtheories of both, and analyzes the status quo of political connection of private listedcompanies and external financing.Secondly, on the basis of theoretical analysis, this paper selects private listedcompanies from2010to2012in Shanghai and Shenzhen listed as a sample, using bankloans and loan term as proxy variable in order to investigate the influence of politicalconnection on debt financing of private listed companies.Thirdly, this paper selects money raised in IPO as explained variable of private listedcompanies from2010to2012, hoping to study the impact of political connection onequity financing of private listed companies.Finally, this article puts forward the countermeasures and suggestions from the anglesof private listed companies and the government. Private listed companies should make fulluse of political connection and other external forces to access to funds, and to broaden thefinancing channels, beyond the conventional way of financing. The government shouldregulate the behavior of private enterprises to participate in political activities, andimprove the financing environment of private listed companies.