The impact of political connections and business groups on cash holdings: Evidence from Chinese listed firms

Tsui-Jung Lin, Hai-Yen Chang, Hui-Fun Yu and Ching-Pao Kao

Global Finance Journal, 2019, vol. 40, issue C, 65-73

Abstract: We investigated the impact of political connections and business group affiliation on the cash holdings of firms listed on two main Chinese stock exchanges. We applied panel data regression analysis on a dataset comprising 10,832 observations for these companies from 2008 to 2015. We found political connections to be positively correlated with cash holdings, while business group affiliation is negatively correlated. Firms with both political connections and business group affiliations hold more cash. These findings are consistent with the tenets of agency theory and the speculative motives of corporate managers.

Keywords: Political connections; Cash holdings; Business groups (search for similar items in EconPapers)
JEL-codes: G3 G30 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:40:y:2019:i:c:p:65-73

DOI: 10.1016/j.gfj.2018.10.001

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