The Impact Of Political Connection Loss On Corporate Debt Ris

Since Fisman first proposed the concept of "political connection",systematic research has been conducted in academia on the definition of political connection,the motivation for establishing political connection,and the economic impact of political connection on enterprises.As research has deepened,studies on the breakdown of political connections have begun to attract the attention of scholars both domestically and abroad.Current research mainly focuses on the impact of political connection breakdown on enterprise value,stock price,and research innovation,with a certain gap in the study of the impact on enterprise debt risk.On October 19,2013,the Organization Department of the Communist Party of China Central Committee issued the "Opinions on Further Regulating the Problem of Party and Government Leading Cadres Holding Concurrent Posts in Enterprises," which explicitly prohibits current and retired party and government leading cadres from holding concurrent posts in enterprises,even if they resign from public office or retire.The issuance of this document triggered a "resignation wave" among officials and executives of listed companies,and also provided an excellent opportunity to study the impact of political connection breakdown on enterprise debt risk.Based on this background,this paper takes the resignation events of officials and executives from 2013 to 2015 as a quasi-natural experiment,using Chinese listed companies from 2010 to 2017 as research samples.A multi-time-point difference-in-differences model was constructed and empirical testing was conducted using Stata software.First,based on relevant literature,rent-seeking theory,information asymmetry theory,and resource dependence theory,this paper analyzed the impact of political connection breakdown on enterprise debt risk.Then,heterogeneity analysis was conducted,focusing on the heterogeneity factors of property rights and regional marketization level,and further discussed the heterogeneous impact of political connection breakdown on enterprise debt risk.Finally,through mechanism analysis,two possible impact pathways of financing constraints and credit financing capacity were identified.The results of this paper have passed a series of robustness tests.The study found that:(1)Political connection breakdown significantly increases enterprise debt risk;(2)The impact of political connection breakdown on debt risk is more significant for non-state-owned enterprises;(3)The impact of political connection breakdown on enterprise debt risk is more significant for enterprises in regions with lower marketization levels;(4)Political connection breakdown increases enterprise debt risk by increasing financing constraints;(5)Political connection breakdown increases enterprise debt risk by reducing the credit financing capacity of enterprises.