Political Connection of Senior Executives and Excess Credit of Enterprises—Research on Based on the Perspective of Ownership System
Journal: Advanced Management Science (AMS)
Author: Xiaoguang Hu
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Based on the sample of 2008-2011 A-share companies in China, This thesis empirically tested the relations between the excess credit of enterprises and political connection of senior executives, and studied the influences of political connection developed by listed companies on its debt financing under the background of transition economy system in China. The research found that the most of enterprises that have obtained over loan were state-owned enterprises, political connection of senior executives of state-owned enterprises has strengthened the formation of over loan of state-owned enterprises, some private enterprises obtained over loan, political connection was not a leading role, but rather bankenterprise relationships. The policy implications of thesis is that development of political connection help alleviate the credit discrimination on private enterprises, but political connection of senior executives of state-owned enterprises has strengthened the formation of over loan of state-owned enterprises and exacerbated the low efficiency of credit resources allocation.