The loss of political connections and corporate financialization

Lihong Wan, Panpan Zhang and Qi Lin

Finance Research Letters, 2023, vol. 57, issue C

Abstract: This paper examines firms' financial asset allocation motives from the perspective of loss of political connections. Based on listed companies in China's stock market, we show that the loss of political connections leads enterprises to hold more financial assets based on preventive saving motives, leading to a stronger tendency of financialization, and this effect is significant only among non-state enterprises but not among state enterprises. Meanwhile, non-SOEs with low debt financing levels tend to hold more financial assets, while non-SOEs with high debt financing capacity keep their financial investment levels relatively the same.

Keywords: Loss of political connections; Corporate financialization; Debt financing (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612323005731
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323005731

DOI: 10.1016/j.frl.2023.104201

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().