Does social capital alleviate financing constraints? A study of China’s creative economy

Shaner Chu, Erin Oldford and Changchun Gao

Asia-Pacific Journal of Accounting & Economics, 2023, vol. 30, issue 6, 1518-1541

Abstract: This study investigates the effect of social capital on financial constraints of Chinese cultural and creative enterprises (CCEs). We disaggregate a firm’s social capital into professional, political, and commercial capital. Our empirical results show that professional social capital can significantly reduce CCEs’ investment-cash flow sensitivity and help gain bank loans, thereby alleviating CCEs’ financial constraints. However, political and commercial social capital do not lessen financial constraints. We also find evidence that intellectual property protection acts to amplify the negative relation between professional social capital and financial constraints. These results are robust to alternative measures of key constructs and model specifications.

Date: 2023
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DOI: 10.1080/16081625.2022.2067882

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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