High-Corruption Environments, Corporate Political Activity, and Financing Constraints in China

Posted: 2 Feb 2014 Last revised: 21 Feb 2019

See all articles by Yiping Wu

Yiping Wu

Shanghai University of Finance and Economics

Oliver M. Rui

China Europe International Business School (CEIBS)

Date Written: December 7, 2013

Abstract

We examine the different effects of corporate political activity on financing constraints for state-owned and private enterprises. We find that corporate political activity can help private enterprises overcome ownership discrimination in the credit market, and the positive effect is conditional on levels of corruption in the external environment. Our analysis on the China Investment Climate Survey (2005) shows that corporate political activity only mitigates financing constraints in the private sector. Furthermore, the value corporate political activity on easing financing constraints is more pronounced for the private firms located in the region with higher corruption.

Keywords: Corporate Political Activity; Financing Constraints; Corruption Environments; Ownership Discrimination; China

JEL Classification: D72, D28

Suggested Citation

Wu, Yiping and Rui, Oliver M., High-Corruption Environments, Corporate Political Activity, and Financing Constraints in China (December 7, 2013). Available at SSRN: https://ssrn.com/abstract=2389167

Yiping Wu (Contact Author)

Shanghai University of Finance and Economics ( email )

Shanghai
China

HOME PAGE: http://spea.shufe.edu.cn/jsp/sh_edu/browser/2.jsp?name=2013000180&identity=80

Oliver M. Rui

China Europe International Business School (CEIBS) ( email )

699 Hong Feng Road
Pudong
Shanghai 201206
China
86-21-28905618 (Phone)
86-21-28905620 (Fax)

HOME PAGE: http://https://www.ceibs.edu/rui-oliver

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