The association between cost of debt and Hong Kong politically connected firms

Mark A. Bliss, John Goodwin, Ferdinand A. Gul and Anson Wong

Journal of Contemporary Accounting and Economics, 2018, vol. 14, issue 3, 321-334

Abstract: This paper investigates the association between Hong Kong politically connected (PCON) firms and their cost of debt and find these firms are associated with significantly lower interest rates being charged by lenders compared to other (non-PCON) firms. We compare our results with earlier investigations of Malaysian and U.S. PCON firms and find that our results are consistent with the results of the U.S. but inconsistent with that of Malaysia. Our results suggest that the economic wealth, the extent of political power, and the pervasiveness of firms having political connections could account for the cross-country differences between the cost of debt and PCON firms.

Keywords: Political connection; Debt cost (search for similar items in EconPapers)
JEL-codes: D72 G32 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:14:y:2018:i:3:p:321-334

DOI: 10.1016/j.jcae.2018.10.001

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Journal of Contemporary Accounting and Economics is currently edited by Agnes C.S. Cheng, P. Clarkson, F.A. Gul, Zoltan Matolcsy, Dan Simunic and Ben Srinidhi

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