A Study On The Relationship Among Political Connections,Financing Constraints And Firm Value

With the continuous development of China’s economy,China’s private enterprises have also made great progress,and made great contributions to China’s economic growth.But can not be ignored is that in the current economic system,private enterprises compared with the state-owned enterprises,subject to unfair treatment,It is difficult to obtain the same cost of capital as the state-owned enterprises from the capital market,the capital market in our country is relatively immature and asymmetric information,which further aggravate the degree of financing constraints the private enterprise and has seriously affected the healthy and sustainable development of the private economy.The problem of financing of private enterprises has been the focus of academic circles.In order to solve this problem,the private enterprises are constantly looking for solutions at the micro level.Through the review of the relevant literature,there are a lot of studies have shown that political connections can help companies get more government support,and to some extent alleviate the financing difficulties of private enterprises.So whether the motivation of private enterprises to establish political connections is to ease the financing constraints,or What kind of impact will political connections have on corporate financing constraints?In addition,the financing constraints will affect the value of the enterprise,there is no clear consensus on the study of this area,how does the financing constraints affect the value of the enterprise?What is the relationship between political connections,financing constraints and corporate values and the relationship between the three?Based on the study of the influence of political association of private enterprise of financing constraints and financing constraints on the enterprise value,further study on the effect of political connection on the relationship between financing constraints and corporate value.Thus,the enterprise value model based on financing constraints is constructed;and consider whether the different level of regional development will lead to different effects of political connections on corporate financing constraints,as well as the impact on political connections,corporate financing constraints and corporate value,Taking the data of private listed companies in Shanghai and Shenzhen two cities from 2011 to 2015 as the sample,the data were descriptive statistical analysis and multiple linear regression analysis,the following results were obtained:(1)political connections can help private enterprises to ease financing constraints;(2)In the regions with low level of regional development,the influence of political connections on the financing constraints of private enterprises is greater;(3)the degree of financing constraints of private enterprises is low,the enterprise value is higher;(4)political connections can weaken the impact of financing constraints of private enterprises on the enterprise value;(5)In the regions with low level of regional development,the impact of political connections on the relationship between private enterprises’ financing constraints and corporate value is greater.The innovation of this article lies in:first,in the measurement of variables,most of the domestic scholars generally use the background of the government to measure the political relevance of the enterprise,this paper,based on the special institutional background of China,connects the political connection and donation of enterprises,and uses the corporate donation to measure the political relevance;second,in the measure of financing constraints of enterprises,the most used by domestic scholars is the FHP model,KZ index and SA index,However,these indexes are based on foreign research,and this paper draws lessons from domestic scholars such as Kuang Xuewen(2010)proposed by LFC to measure the financing constraints;third,in this paper,through the study of the relationship between the political connection of private enterprises on the financing constraints and the relationship between the political relevance,financing constraints and corporate value,combining the study of the three.