The Influence Of Political Connections On Financing Constraints Of High-tech Enterprises In China

Society in 21 st century is a scientific and technological society with rapid advance.With the wide application of high and new technology in all walks of life,the quality of human life and health has been greatly improved.High-tech enterprises play an increasingly important role in promoting national economic development,enhancing the comprehensive national strength and improving living standards for people.Our country has been committed to encouraging enterprises to improve the level of research and development and supporting the development of high-tech enterprises.In 2016,the revised measures for the administration of the recognition of hghi-tech enterprises was introduced,which provides an important policy support for regulating the development of high-tech industries and promoting enterprises to carry out scientific and technological innovation.The development of enterprises can not be separated from the support of funds that preference to invest in large-scale enterprises with stable main business,so it is very hard for enterprises with small scale to get enough funds.High-tech enterprises generally have small size,high input costs and high risk characteristics with strong uncertainty,which make it difficult for them to obtain financing,especially the bank's credit financing.Therefore,many scholars at home and abroad are committed to study the financing constraints of high-tech enterprises,trying to solve the problem of corporate financing constraints to provide some practical solutions.The political connection of enterprises has become a common phenomenon.In the economic activities,entrepreneurs often actively participate in political activities,such as making government officials,representing NPC deputies or CPPCC members,and appointing government officials who leave office.Scholars study this phenomenon and found that political relations is helpful for the development of enterprises.Specific manifestations:provide property rights protection and project resources,reduce the degree of enterprise information asymmetry,provide tax incentives and financial subsidies and so on.So,can political relations alleviate the financing constraints of high-tech enterprises? If so,what is the political link to ease the financing constraints of high-tech enterprises? This is the main content of this study.The research samples of this paper are high-tech enterprises listed on GEM and SMEs board.Under the guidance of the IPO policy,high-tech enterprises that mainly focus on GEM and SMEs board accounted for about 78%.As the sample for research,it is representative.In this paper,cash-cash flow sensitivity is used as the measure of financing constraints,chairman and general manager with political background are used as proxy variables of political association which is decomposed into four types: central type,local type,representative type and political type.The research idea of this paper is as follows: First of all,by building a cash-cash flow model,this paper analyzed whether high-tech enterprises in our country are facing financial constraints.The empirical results show that Chinese high-tech enterprises do exist significant positive cash-cash flow sensitivity.Next,this paper analyzed the impact of different types of political association on the financing constraints of high-tech enterprises.The concern is whether the four type of political associations can reduce the cash-cash flow sensitivity.Finally,we study the impact of political association on shortterm borrowing,long-term borrowing,equity financing and government subsidy of high-tech enterprises,so as to excavate the concrete channels of political association to alleviate the financing constraints of high-tech enterprises.Through theoretical research and empirical analysis,this paper draws the following conclusions.Firstly,there is a significant positive cash-cash flow sensitivity in high-tech enterprises,therefore,Chinese high-tech enterprises do exist financing constraints.Secondly,the cross of the political association and the cash flow of the operating activities significantly reduces the cash-cash flow sensitivity of the enterprise.Therefore,the political association can alleviate the financing constraints of the high-tech enterprises.Thirdly,high-tech enterprises with political associations can obtain more short-term loans,equity financing and government subsidies than those without political associations,and the acquisition of long-term borrowings is not significant.Therefore,the channel that political association relieves the high-tech technology companies include short-term borrowing,equity financing and government subsidies,but do not include long-term borrowing.