Political Connections,Marketization Degree And Dynamic Adjustment Of Capital Structure

Since the reform and opening up in the 1970s,China's economy has been developing rapidly.However,due to problems such as the imperfect financial system,loopholes in the legal system and weak protection of property rights,the development of Chinese enterprises has many problems.In order to overcome the impediments caused by institutional defects on the development of enterprises,many companies began to seek political connections.Political connections are ubiquitous in countries all over the world.Enterprises with political connections tend to occupy more political resources and reduce the financing constraints of enterprises,thus creating a better environment for the development of enterprises and contributing to the long-term and stable development of enterprises.In the process of economic development,the relationship among the market,the government and the enterprise has always been one of the focuses of the academic community.In recent years,a large number of studies have shown that companies with political connections will affect their capital structure.However,the existing literature mostly examines the correlation between the two from a static perspective,while ignoring the dynamic nature of the capital structure.Based on the above background,this paper proposes the following two questions:First,whether political connections significantly affect the dynamic adjustment of capital structure;Second,in regions with different marketization processes,whether there is a huge difference in the influence of political connections on the dynamic adjustment of capital structure.This article takes Shanghai and Shenzhen A-share listed companies between 2008-2016 as the research object,firstly examines the correlation between political connections and the dynamic adjustment of capital structure,and Secondly studies the effect of marketization on the relationship between the two effect.The research in this paper is divided into the following six parts:The first part is the introduction.This part mainly introduces the research background of the article and the theoretical and practical significance of the research,and further introduces the research methods and the overall framework of the article,and summarizes the innovation of this article.The second part is the literature review.This part mainly sorts out and reviews the domestic and foreign literature from the three aspects of the related issues of political relevance,the influence factors of the dynamic adjustment of capital structure,and the issues related to the process of marketization.The third part is related theory and research hypothesis.This section first introduces the related concepts of political connections,capital structure,and marketization process.Secondly,it introduces the theoretical basis of the research.Based on this,it analyzes how political connections affect the dynamic adjustment of capital structure.After analyzing its mechanism of action,put forward the research hypothesis of this paper.The fourth part is the research design.In this section,based on the assumptions already given above,the appropriate research variables are selected and the sample data is determined.A suitable research model is established to reasonably explain the relevant hypotheses.The fifth part is the empirical test and analysis of the results.In the section,the descriptive statistical analysis of the collected sample data is first carried out,and then the correlation analysis is performed on each variable.Finally,the model is subjected to regression analysis and the experimental results are observed.To ensure the accuracy of the results,a robustness test is performed.The sixth part is the conclusions and recommendations.This part summarizes the results of the research,puts forward the research conclusions,and gives relevant suggestions.In addition,the limitations of the existence of this paper in the study and the direction of further improvement are introduced.According to the results above,politically-related companies have faster capital structure adjustments and lower capital structure deviations.And the stronger the strength of political connection,the more obvious this effect will be.And there is little difference in the pace of adjustment of capital structure between politically-related companies and non-political-related companies in regions with rapid marketization.The innovation of this paper is expanding the research on the relationship between political connections and capital structure from the static field to the dynamic field.In addition,the marketization process is used as a mediator to study the relationship between the two,and the relationship between political connections and the dynamic adjustment of corporate capital structure is discussed in a market environment with Chinese characteristics,which provides additional evidence for the existing research.