A Research On The Impact Of Political Connection Of Directors,supervisors And Executives On Corporate Debt Financing

From the "financial channel shortage" in 2018 to the "financial supply correction" in 2019,China's external financing environment has continued to change.The difficulty of financing has given rise to the practical significance of studying debt financing behavior.The economic transition of China determines that debt financing must be constrained by domestic political and economic systems.Therefore,the interaction between enterprises and government is also likely to have a essential impact on debt financing decisions.The relationship between enterprise and government is defined as "political connection",easing financing constaints by information effects and resource effects.Similarly,the institutional environment reduces the ex-ante and ex-post risks of debt financing through strong property rights protection,complete contract enforcement,efficient judicial system and legal constraints on government public power.This paper selects the data of Shanghai and Shenzhen A-share listed companies from 2008 to 2018,making empirical test by used a multiple regression model.On the one hand,in addition to "with or without political connections",the indicators are refined into the breadth(network size)and depth(levels)of political connections.Their impact on the size and maturity structure of debt is demonstrated.On the other hand,we discuss the substitution effect of political connection and institutional environment,finding out that the mechanism of the two on the debt financing.The research conclusions show that: First,political connections help companies obtain larger and longer-term loans.When the proportion of directors,supervisors and executives with political connections(the breadth)is getting greater,the positive effect to the debt financing is more obvious.However,the work experience of provincial government agencies and above(the depth)can't effectively alleviate financing constraints.Second,"with or without political connections" has a more significant positive impact on non-state-owned(private and other)enterprises,but the heterogeneity doesn't exist in the subdivision dimension.Third,as the level of institutional environment improves,the impact of political connections on debt scale and maturity structure is gradually reduced,indicating a substitution effect between them.This paper enriches the study of economic consequences caused by institutional environments and political connections on debt financing.Simultaneously,it suggests that companies should correctly understand the substitution effect of political connections and focus on internal capacity building.It also provides some references to the institutional construction,policy information disclosure,and market supervision system of China.