Political Connection,Credit Financing And Underinvestment

The establishment of political affiliation in enterprises:is common in allcountries in the world and in our country as well.In our country's political and economic system,the government plays a leading role and control over many scarce resources that are crucial to the survival and development of enterprises.Compared with the state-owned enterprises,private-owned' enterprises in our country are disadvantage because of their multiple constraints on financing and investment.Therefore,the overwhelming majority of private enterprises in our country actively establish close relations with the government and thus obtain scarce resources for development.At the same time,the underinvestment prevails in the listed companies in our country,undermining the value of the enterprises.In response to this problem,this paper takes the relationship between the enterprise's political connection and credit financing as the starting point,and studies and analyzes the series of influences that the political connection of enterprises have on underinvestment.Based on the theory and literature that elaborates and summarizes political relevance,credit financing,and corporate investment efficiency,this paper takes the five-year data of A-share private listed company from 2012 to 2016 as a sample study to examine the relationship between political connection and access to corporate credit resources,The impact of political linkages on underinvestment in firms,and the role of political affiliates in underinvesting through access to more credit resources.The results show that the political association can ease the underinvestment of private listed companies,and the more the political connection strength,the more can alleviate the insufficient investment.The private listed companies with political connection can get more debt financing.Between the intermediary role.