Political Connections,Bank Loans And Firm Value

In recent years,China's economic development has maintained a stable trend,which the contribution of private enterprises can't be discounted.Although the private economy has made good development,but it's development process is twists and turns.In the market competition environment is far more than the obstacles to state-owned enterprises,one of the most prominent obstacles is debt financing.The lack of funds for private enterprises has affected the normal production and business activities of enterprises,inevitably damage the value of the enterprise.The government plays a leading role in the social-economy and still acts as a social resource allocator.Therefore,in order to obtain economic resources and policy support,private enterprises through the construction of political connections to narrow the relationship with the government,so it can overcome the negative impact of institutional deficiencies and improve their own business environment,and thus access to debt financing advantages.It can be seen that it is of practical significance to study the political connection phenomenon of private enterprises in our country.In academia,political connections and firm value have been a hot topic for scholars to study,but there is no consensus on the relationship between political connections and firm value.This paper summarizes the domestic and foreign research literature on the relationship between corporate political connection,bank loan and enterprise value,and points out that the existing research in our country is insufficient.Based on the theory of resource dependence,institutional theory,principal-agent theory and rent-seeking theory,this paper puts forward the corresponding research hypothesis.On this basis,this paper analyzes the social phenomenon of political connection,and then quantitatively analyzes the influence of political associations on enterprise value,which further analyzes the effect of political associations on enterprise value in enterprises of different sizes.At the same time,it analyzes the influence of corporate bank loan on enterprise value and explores the possible influence of political connections on the relationship between bank loan and enterprise value.This paper chooses the private listed on the Shanghai Stock Exchange and listed on the Shenzhen Stock Exchange companies from 2011 to 2015 as the research samples,and makes an empirical test on the hypothesis proposed in this paper,and the paper researched:(1)The establishment of political connections is conducive to improving the value of private enterprises,In other words,the establishment of political associations of private enterprises' value is higher than the enterprises with establish political connections.(2)After further distinguishing the scale of enterprises,it is found that in the large-scale enterprises,the political connections can't improve the enterprise value,but it has a negative impact on the enterprise value.In the small-scale enterprises,the political association has a positive effect on the promotion of the enterprise value.(3)The corporate value of private enterprises is negatively correlated with bank loans,and negative correlation has significant effects in short-term bank loans and long-term bank loans.(4)The political connections can improve the adverse effect of the bank loan of the private enterprise on the firm's value,and the improvement effect increases with the increase of the political association intensity.The conclusion of this paper shows that in China's institutional environment,private enterprises through the establishment of a relationship with the government to obtain more economic resources and policy support,in order to enhance the value of the enterprise.Private enterprises are also aware of the time and cost of building and maintaining a relationship with the government while paying attention to the positive impact of political relations on the business.In this regard,this paper puts forward relevant policy recommendations to help private enterprises in the production and operation process to enhance their competitiveness.The research of this paper has a certain significance for the future research of political connection,bank loan and enterprise value,and also provides a theoretical basis for how private enterprises can solve the problem of debt financing and promote the improvement of enterprise value in the process of development.