Directors' Financial Connections And Outward Foreign Direct Investment

Enterprise internationalization is a hot topic in the field of international economics in recent years.Scholars from internationalization mode,development strategy and outward foreign direct investment motivation of Chinese enterprises outward foreign direct investment has carried on the theoretical research and empirical analysis,but to investigate on the impact of financial factors on Chinese enterprises outward foreign direct investment less literature.Since President Xi Jinping proposed " the Belt and Road",both exports and outward foreign direct investment have shown a flourishing scene.Internationalization is the main form in exports and outward foreign direct investment(OFDI),enterprise of OFDI compared to export the high fixed cost,project cycle is long,is facing more serious information asymmetry,to the enterprise financing level put forward higher requirements.At present,China's capital market development is imperfect,however,significant financial repression features,many enterprises in the process of "going out" is facing serious funding gap,has become our country enterprise financing constraints to the overseas market an important hurdle.Many studies have shown that companies build connections with financial institutions through executives with backgrounds in financial institutions,a horizontal link known as financial linkages.Financial connections reduces the cost of information exchange between enterprises and financial institutions,reduces information asymmetry,and thus alleviates corporate financing constraints.With the gradual improvement of China's capital market,many enterprises involved in economic activities have begun to develop new financing channels,and the behaviors associated with financial institutions are becoming more and more common.As the core mechanism of corporate governance,the board of directors plays the role of supervision and consultation and plays a key role in strategic decision-making.As the representative of the executive elite,the economic consequences of the financial background of the directors have also been paid attention by experts and scholars in recent years.In this article,therefore,the academic research on financial connections and OFDI,on the basis of based on asymmetric information theory,the theory of relationship lending,explore directors' financial connections to the enterprise the influence of OFDI,at the same time analyzed the financial director association path,the function of enterprise of OFDI enrich the study of financial factors on the enterprise OFDI.Based on the Shanghai and Shenzhen a-share listed companies in China from 2008 to 2015 as the research object,research director of financial related to the enterprise the influence of OFDI,and further tested under different property rights.It is found that the enterprises with directors' financial connections,are more likely to invest and have a significant positive correlation.Furthermore,the investment effect of directors' financial connections,is more significant when property rights are non-state-owned enterprises.Affect director associated financial path analysis the mechanism of action of the OFDI,found that financial connections can improve the enterprise of high degree of financing constraints of OFDI,introduction of investment as scalability testing also supports this conclusion.The main contribution of this paper is: firstly,it expands the research scope of financial connections and enriches relevant research.Second,the research results of this paper have positive guiding significance for enriching the informal financial mechanism and promoting the sustainable and healthy development of enterprises' outward foreign direct investment.