Political Connection,Loan Financing And Firm Value

For real estate enterprises,the sources of financing and resources in land and project development are very important.The rapid and vigorous development of real estate in the past 20 years,the expansion of monetary policy is undoubtedly one of the important reasons of the growth.With the convening of the NPC &CPPCC,the regulation policy of the real estate industry has basically set the tone.The tighter supervision of credit funds and financial deleveraging cause that the financing channels and scale of real estate enterprises will be limited.Whether it's in an economic transformation country or in a developed market country,the government masters certain scarce resources and the right to allocate such resources.It is precisely due to the existence of such right that enterprises will have more political connections with the government.The political connection has been widespread in the world.Enterprises expect to obtain benefits from the government's distribution rights by establishing the political connection,so as to enhance their competitive strength.The financial market in China started relatively late.It needs the government's "visible hand" to control the market.The government occupies an absolute position in the economic operation of our country,and the demand for the establishment of political connections between the enterprises and the government is stronger.The development of real estate enterprises can not be separated from the support of loan financing.The study of the relationship between political connection,loan financing and enterprise value is of great significance for the real estate enterprises to improve the efficiency of capital allocation and the reform of the market economy in China.This paper reviews the relevant research results about political connections,loan financing and business value at home and abroad.Next,we define the relevant concepts and variables,and put forward the research hypotheses based on the existing theories and the background of our current system.Based on this,this paper selects the real estate industry which is very dependent on the loan financing as a sample and selects 2010-2016 listed real estate companies listed in Shanghai and Shenzhen as the research sample.We analysis the influence of the political connection on the real estate enterprise value and the loan financing ability and explore the political connection to help the real estate enterprises obtain the intermediary role of loan financing on enterprise value.The research results will provide practical suggestions for government departments and real estate enterprises,which has strong practical significance.The empirical results show that the real estate enterprises can significantly improve their loan ability with political connections and this effect is more obvious in small businesses.There are differences in the impact of different levels of political relevance on the loan and financing of real estate enterprises,and the influence of the central political connection is significantly greater than the influence of the political connections at the provincial level and the city level.Political connection can not improve the value of real estate enterprises,but will bring down the value of the enterprise,and this effect is mainly through political connection to make real estate get more loan financing.