Purifying political ecology: How anti-corruption campaign affects capital structure decisions?
Kai Wu and
Pacific-Basin Finance Journal, 2022, vol. 75, issue C
This study examines the role of the anti-corruption campaign in capital structure decisions for Chinese listed firms using investigations of senior officials from 2007 to 2019. We find a positive effect of the anti-corruption campaign on the firm’s leverage adjustment speed, consistent with the notion that purified political ecology helps reduce financial frictions in the capital market. The positive relationship is alleviated for firms in cities ruled by the investigated officials as they face a loss of political resources and financing advantages. Financial frictions, agency costs, and credit reallocation are possible channels affecting the capital structure dynamics. Further evidence suggests that the anti-corruption campaign reduces the deviation from the optimal capital structure, facilitates external financing, and increases executive incentives.
Keywords: Anti-corruption campaign; Capital structure adjustment; Political connection (search for similar items in EconPapers)
JEL-codes: G10 G11 G14 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:75:y:2022:i:c:s0927538x22001408
Access Statistics for this article
Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee
More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().