Research On The Influence Of Political Connection On The Financial Flexibility Of Enterprises In The Market Environment

As a kind of financial resource guarantee,financial flexibility can help enterprises to prevent and utilize the threats and opportunities brought by environmental uncertainty,ease financing constraints,avoid business risks,improve investment efficiency,and realize enterprise value.It is a comprehensive regulation ability of enterprises.Under the special institutional background of our country,as an important "special" social relationship,political connection can not only stabilize the external environment of business operation and development,bring resource advantages to it,but also eliminate the institutional discrimination of private enterprises and ease their financing constraints.Because of the similarity between the motivation of holding financial flexibility and building political connection,this paper studies the influence of political connection on financial flexibility.With the promotion of market-oriented reform and the continuous improvement of the institutional environment,the imbalance of regional development is still a real problem facing China.The role of different regional political connections in financial flexibility cannot be treated in a single way.Therefore,on this basis,the relationship between the two can be studied in different regions according to the level of market-oriented process and government intervention,which provides suggestions for Chinese enterprises to adapt to local conditions It provides theoretical and data support.Based on free cash flow theory,social capital theory and unbalanced growth theory,this paper puts forward research hypotheses,and selects 2014-2018 Shanghai and Shenzhen A-share listed companies as research samples.First,select the agent variable,measure the financial flexibility of the enterprise with the sum of cash flexibility and debt flexibility,measure the political relevance with the virtual variable,measure the degree of political relevance with the assignment method,and measure the marketization process and the degree of government intervention in the region where the enterprise is located with the ranking of the external market index;secondly,use the mixed OLS regression model,respectively in the total sample,private Under the enterprise sample and the state-owned enterprise sample,the research variables were multiple regression;finally,the robustness test was carried out by using the propensity score matching method(PSM).The results show that:(1)on the whole,the political connection has a significant negative correlation with the financial flexibility of the enterprise,that is,the political connection has an alternative effect on the financial flexibility,and the higher the degree of political connection is,the stronger the alternative effect is.(2)The effect of political connection on financial flexibility changes because of the change of the nature of enterprise property rights.In private enterprises,political connection has an alternative effect on financial flexibility,while in state-owned enterprises,political connection has no effect on financial flexibility.(3)In the areas with higher marketization process,political connection has no effect on financial flexibility of enterprises,while in the areas with lower marketization process,political connection still has an alternative effect on financial flexibility.(4)In areas with low degree of government intervention,political connection has no effect on financial flexibility of enterprises,while in areas with high degree of government intervention,political connection still plays an alternative role in financial flexibility.The main contributions of this paper include:not only to grasp the effect of political connection on financial flexibility on the whole,but also to compare and study the influence of political connection on financial flexibility in different types of enterprises,enriching the research on the influencing factors of financial flexibility,and providing theoretical basis for the financial flexibility decision-making of enterprises with different property rights in China.On this basis,according to the current situation of China's institutional environment,from the perspective of the external market environment,this paper studies the different effects of political connections on the financial flexibility of enterprises in different regions,which provides practical evidence for the phased results of China's market-oriented reform.