Political Connections, Debt Restructuring, and Enterprise Investment: Evidence from China
This paper shows that the link between debt restructuring and enterprise investment in emerging economies hinges critically on the political connections. Taking Chinese A-share listed enterprises from 2005 to 2016 as samples, we examine whether and how political connections affect the relationship b...
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| Format: | Article |
| Language: | English |
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Wiley
2020-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2020/5041768 |
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| _version_ | 1832546852635934720 |
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| author | Xinlin Mo Jinglu Jiang |
| author_facet | Xinlin Mo Jinglu Jiang |
| author_sort | Xinlin Mo |
| collection | DOAJ |
| description | This paper shows that the link between debt restructuring and enterprise investment in emerging economies hinges critically on the political connections. Taking Chinese A-share listed enterprises from 2005 to 2016 as samples, we examine whether and how political connections affect the relationship between debt restructuring and enterprise investment based on the DID method. The results show that compared with nonpolitically connected enterprises, debt restructuring effectively improves the investment efficiency in enterprises with political ties, which is mainly due to alleviating the overinvestment and underinvestment. Furthermore, the positive effect of debt restructuring on investment is more prominent in enterprises with weak strength of political connection. It is worth noting that as the strength of political connection increases from weak to strong, the positive impact of debt restructuring on investment turns to negative impact, which reflects the heterogeneity of connection strength on the relation between debt restructuring and investment. This paper provides new evidence for understanding the investment behaviour of debt restructuring enterprises and provides some policy implications for managers and decision-makers intending to improve the investment efficiency and enhance the sustainable development of enterprises from the perspective of political connections. |
| format | Article |
| id | doaj-art-0b507a0291294093b460a8f1fd91055b |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2020-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-0b507a0291294093b460a8f1fd91055b2025-02-03T06:46:54ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2020-01-01202010.1155/2020/50417685041768Political Connections, Debt Restructuring, and Enterprise Investment: Evidence from ChinaXinlin Mo0Jinglu Jiang1School of Economics and Management, China University of Geosciences, Wuhan 430074, ChinaInstitute for Advanced Studies in Finance and Economics, Hubei University of Economics, Wuhan 430205, ChinaThis paper shows that the link between debt restructuring and enterprise investment in emerging economies hinges critically on the political connections. Taking Chinese A-share listed enterprises from 2005 to 2016 as samples, we examine whether and how political connections affect the relationship between debt restructuring and enterprise investment based on the DID method. The results show that compared with nonpolitically connected enterprises, debt restructuring effectively improves the investment efficiency in enterprises with political ties, which is mainly due to alleviating the overinvestment and underinvestment. Furthermore, the positive effect of debt restructuring on investment is more prominent in enterprises with weak strength of political connection. It is worth noting that as the strength of political connection increases from weak to strong, the positive impact of debt restructuring on investment turns to negative impact, which reflects the heterogeneity of connection strength on the relation between debt restructuring and investment. This paper provides new evidence for understanding the investment behaviour of debt restructuring enterprises and provides some policy implications for managers and decision-makers intending to improve the investment efficiency and enhance the sustainable development of enterprises from the perspective of political connections.http://dx.doi.org/10.1155/2020/5041768 |
| spellingShingle | Xinlin Mo Jinglu Jiang Political Connections, Debt Restructuring, and Enterprise Investment: Evidence from China Discrete Dynamics in Nature and Society |
| title | Political Connections, Debt Restructuring, and Enterprise Investment: Evidence from China |
| title_full | Political Connections, Debt Restructuring, and Enterprise Investment: Evidence from China |
| title_fullStr | Political Connections, Debt Restructuring, and Enterprise Investment: Evidence from China |
| title_full_unstemmed | Political Connections, Debt Restructuring, and Enterprise Investment: Evidence from China |
| title_short | Political Connections, Debt Restructuring, and Enterprise Investment: Evidence from China |
| title_sort | political connections debt restructuring and enterprise investment evidence from china |
| url | http://dx.doi.org/10.1155/2020/5041768 |
| work_keys_str_mv | AT xinlinmo politicalconnectionsdebtrestructuringandenterpriseinvestmentevidencefromchina AT jinglujiang politicalconnectionsdebtrestructuringandenterpriseinvestmentevidencefromchina |