The allocation of entrepreneurial efforts in a rent-seeking society: Evidence from China

Dong, Zhiqiang; Wei, Xiahai; Zhang, Yongjing

doi:10.1016/j.jce.2015.02.004

Cited by 53 publications

(28 citation statements)

References 20 publications

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“…Since ordinary investors and creditors do not share enterprises' interests brought about by political connection, they face higher risks because of Government rent‐seeking. Therefore, they require a higher rate of return, which requires enterprises to have higher capital costs (Chen, Feng, Zhu, Han, & Long, ; Dong, Wei, & Zhang, ; Du & Mickiewicz, ). The empirical results of the representative political connections are more obvious than those of the official political connections, which also proves the analysis above.…”

Section: Discussionmentioning

confidence: 99%

The impact of water information disclosure on the cost of capital: An empirical study of China's capital market

Zhou

Zeng

et al. 2018

Corp Soc Responsibility Env

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This study seeks to understand the underlying relationship between water information disclosure and the cost of capital in Chinese high‐water risk firms. With continuous strengthening of the Chinese Government's water regulation policy, water resources have begun to affect the sustainable development of enterprises. Many stakeholders have begun to pay attention to a series of water resources issues that companies face. As an important means of transmitting signals between enterprises and capital markets, water information disclosure can help enterprises achieve more favourable views of stakeholders. Using a sample of 334 listed companies in the Chinese high‐water sensitivity industry from 2010 to 2015, this paper examines the influence of these firms' water information disclosure on the cost of capital, and analyses the function mechanism of political connection on the relationship between water information disclosure and enterprise capital cost by using a panel regression model.

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Section: Discussionmentioning

confidence: 99%

The impact of water information disclosure on the cost of capital: An empirical study of China's capital market

Zhou

Zeng

et al. 2018

Corp Soc Responsibility Env

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“…Unlike other countries, the government of China is a regulator in economic development with a multiple administrative hierarchy, each of which may have different impacts on corporate behaviors (Chang & Wu, ). Studies (Dong, Wei, & Zhang, ; Li & Zhou, ; Luo, Wang, & Zhang, ) have shown that companies with political connections enjoy many advantages in terms of bank loans, financial subsidies, and tax breaks, with significantly better corporate performance than those without political connections. In addition, companies are extremely vulnerable to the drag of imperfect market mechanisms in the development process.…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

Carbon risk management and corporate competitive advantages: “Differential promotion” or “cost hindrance”?

et al. 2020

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Given the strengthening of carbon regulations and the launch of emission trading scheme in China, companies are facing tremendous pressure to reduce carbon emissions, suggesting the necessity of understanding whether carbon risk management may affect corporate financial benefits. Therefore, this paper empirically demonstrates the influence of carbon risk management on corporate competitive advantages. We find that the relationship between carbon risk management and corporate competitive advantages is a "kuznets curve" that exists only among firms with weak product competition. And this relationship tends to be weakened in firms with a distant administrative hierarchy. We conclude that the influence of low carbon management on corporate competitive advantages is complicated and subject to the firm's political relevance. K E Y W O R D S administrative hierarchical distance, carbon risk management, competitive advantages, resource-based view, sustainable development

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“…Feng et al (2014) focus on Chinese listed firms; they find that political connections contribute to firms' post-IPO stock values and accounting performances. These outcomes help explain why firms are encouraged to actively develop political connections (Banerji, Duygun, & Shaban, 2018;Dong, Wei, & Zhang, 2016;Feng et al, 2015;Yueh, 2009).…”

Section: The Importance Of Political Connections: a Review Of Literaturementioning

confidence: 99%

“…Regular participation in political activities enhances their opportunities to cultivate close relationships with party members such as bank officials. Frequent contacts facilitate mutual trust and eliminate information asymmetry problems between households and loan officers, thereby increasing the households' probability of getting loans (Banerji et al, 2018;Cole, 1998;Dong et al, 2016;Feng et al, 2015). Therefore, because politically connected households may be more motivated to apply for bank loans, we derive the following hypothesis: H1: Households with political connections having demand for bank loans are more likely to apply for loans than households without such connections.…”

Section: The Importance Of Political Connections: a Review Of Literaturementioning

confidence: 99%

Political connections and household access to bank loans: evidence from China

Hermes

Lensink

2020

Economic Research-Ekonomska Istraživanja

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Using data from a large household survey among 8,438 households in China in 2011, we analyse whether the fact that a household head is a member of a political party in China increases the probability that the household has access to a bank loan. We investigate how these connections influence the decision of households to apply for a bank loan (i.e., the demand side) and the decision of the bank to approve the loan (i.e., the supply side). We show that political connections are positively associated with both the households' willingness to apply for a loan, as well as with the probability that they get a loan from the bank. We make two contributions to the literature on the determinants of households' access to credit. We are the first to analyse the role of political connections as a determinant of households' access to bank loans. Second, we analyse the role of political connections throughout the process of allocating bank loans, i.e., we decompose the loan application process into the households' self-selection process and bank's selection process.

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The allocation of entrepreneurial efforts in a rent-seeking society: Evidence from China

Cited by 53 publications

References 20 publications

The impact of water information disclosure on the cost of capital: An empirical study of China's capital market

The impact of water information disclosure on the cost of capital: An empirical study of China's capital market

Carbon risk management and corporate competitive advantages: “Differential promotion” or “cost hindrance”?

Political connections and household access to bank loans: evidence from China

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