Debt maturity, cash flow volatility and political affiliation in China

44 Pages Posted: 20 Dec 2023

See all articles by Mustafa Caglayan

Mustafa Caglayan

Heriot-Watt University - School of Management and Languages

Simona Mateut

Nottingham University Business School

Piercarlo Zanchettin

University of Leicester

Date Written: December 19, 2023

Abstract

Using a large dataset with over half a million observations for 161 thousand Chinese firms, we examine the role of political affiliation on the debt maturity of firms experiencing varying levels of financial volatility. Our findings indicate that politically affiliated firms have reduced capacity to adjust their debt maturity when firm-specific risk rises. Furthermore, we demonstrate that this effect is stronger for firms affiliated with local levels of government relative to central levels. We argue that political affiliation can play a disciplining role in environments where credit is controlled by the state and politicians’ careers depend on local economic performance.

Keywords: debt maturity, political connections, cash flow volatility, panel fractional response regression

Suggested Citation

Caglayan, Mustafa and Mateut, Simona and Zanchettin, Piercarlo, Debt maturity, cash flow volatility and political affiliation in China (December 19, 2023). British Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4669131

Mustafa Caglayan

Heriot-Watt University - School of Management and Languages ( email )

Edinburgh EH14 4AS, Scotland
United Kingdom

Simona Mateut (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

Piercarlo Zanchettin

University of Leicester ( email )

Department of Economics
Leicester, LE1 7RH
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
39
Abstract Views
233
PlumX Metrics