Do Political Connections Decrease Financial Flexibility Reserves? Evidence from Chinese Private Firms

Zi-xu Liu
2017 Universal Journal of Accounting and Finance  
This paper examines the impact of political connections on financial flexibility of private firms in China. Using a nationwide survey of Chinese private firms, we find that political connections can decrease financial flexibility reserves when financial constraint, environmental uncertainty and other variables are controlled. We further find that the high strength of political connections decreases more financial flexibility reserves than the low strength of political connections does.
doi:10.13189/ujaf.2017.050201 fatcat:mhevaxwb7vba3b5ssxz5mhck7q