Analysis Of The Impact Of Political Connection Damage On Corporate Financing Constraints From The Perspective Of Executive Investigation And Punishment

Since the 18 th National Congress of the CPC,the CPC Central Committee with Comrade Xi Jinping at its core has insisted that those who commit corruption must be punished.A large number of corrupt executives have been exposed,including those with political backgrounds who once served in the government,served as depuconnection to the National People’s Congress,and served as members of the CPPCC.The investigation and punishment of executives with political backgrounds has damaged the political connection that some enterprises have painstakingly managed.It is worth discussing what impact the political connections damage will bring to the enterprises.At the same time,the government’s work reports in recent years have repeatedly pointed out the financing situation of enterprises.It can be said that the problem of difficult and expensive financing is not ignored.Capital is the blood of the survival and development of a company and the core of the long-term development of an enterprise.Therefore,this paper discusses the impact of political connection damage on enterprise financing constraints,in order to provide enterprises with coping strategies after political connection damage.This paper describes the damage of corporate political connection with the investigation of executives with political backgrounds after the 18 th CPC National Congress,the enterprises with damaged political association were taken as the treatment group,and the propensity score matching method was used to match the enterprises without damaged political association as the control group,selection of the treatment group and control group in 2007-2019 A-share listed company data,using the double difference method,discussed the political link breakage influence on corporate financing constraints,and on this basis,from the nature of property rights and the analysis of audit quality heterogeneity in two dimensions.Then,from the perspective of the internal control of the enterprise itself and the attention of the media outside the enterprise,this paper discusses the effective way to adjust the financing constraints caused by the damage of political association.The empirical results show that,first,the damage of political connection will significantly aggravate the degree of financing constraint of enterprises,and it is more significant in the context of strong anti-corruption.Second,compared with state-owned enterprises and the enterprises audited by the "Big Four",the aggravating effect of the damage of political connection on the financing constraint of enterprises is more significant in non-state-owned enterprises and the enterprises audited by the "Non-Big Four".Third,for enterprises with broken political connection,a good internal control system can effectively relieve the problem of financing constraints,because a good internal control system can effectively supervise and restrict the operation of enterprises,which alleviates information asymmetry between enterprises and external investors and strengthens investors’ willingness to invest.Fourthly,media attention can alleviate the aggravating effect of damaged political ties on enterprise financing constraints,because media attention can improve the transparency of enterprise information and reduce the information asymmetry between enterprises and investors.To sum up,with the formation and strengthening of the external anti-corruption environment,it is no longer the optimal choice to seek political connection for development.Enterprises should regulate their own behavior,practice social responsibility,establish a good internal control and reputation management system,and rationally treat political connection,do not blindly establish a relationship with the government,and should focus on their own capacity building.This has certain practical guiding significance for the development direction of enterprises in the future.In addition,the government should build a good external regulatory system to alleviate the information asymmetry between enterprises and investors and enhance the confidence of investors.The government will establish a fair and just financial environment,unswervingly promote market-oriented reform,improve the level of financial development,and effectively solve the problem of difficult and expensive financing for enterprises.