Private enterprise identity and short-term debt for long-term investment: Evidence from China

Lirong Chen, Ruirui Mu, Yanwen Dai and Xuanhao Huang

Finance Research Letters, 2024, vol. 67, issue PB

Abstract: Using a sample of private enterprises listed on China's A-shares from 2003 to 2021, we find that, identity issues increase the degree of short-term debt for long-term investments. Furthermore, mechanism tests indicate that identity issues aggravate the short-term debt for long-term investment by exacerbating information asymmetry, increasing operational risk and financing cost. We also reveal that the influence of identity issues weakens with high corporate analyst attention and strong board of directors' independence. The study contributes to the literature by examining the impacts of private enterprises’ identity issues on financial decision-making from the evidence from China.

Keywords: Private enterprises; Identity issue; Short-term debt for long-term investment; Financing cost (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:67:y:2024:i:pb:s1544612324009310

DOI: 10.1016/j.frl.2024.105901

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