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Political Connections and the Cost of Equity Capital in China
|關鍵字:||政治關係;權益資金成本;Political Connections;Cost of Equity||引用:||Akey, P. (2013). Valuing changes in political networks: evidence from campaign contributions to close congressional elections. Unpublished working paper, January. Allen, F., Qian, J., &Qian,M. J. (2005). Law, finance, and economic growth in China. Journal of Financial Economics, 77(1), 57–116. Boubakri, N., Cosset, J.C., Saffar, W. (2008). Political connections of newly privatized firms. Journal of Corporate Finance, 14, 654-673. Boubakri, N., Guedhami, O., Mishra, D., Saffar, W. (2012). Political connections and the cost of equity capital. Journal of Corporate Finance, 18, 541-559. Chaney, P.K., Faccio, M., Parsley, D.C. (2011). The quality of accounting information in politically connected firms. Journal of Accounting and Economics, 51, 58-76. Faccio, M. (2006). Politically-connected firms. American Economic Review, 96, 369-386. Fama, E., French, K. (1992). The cross sections of expected stock returns. The Journal of Finance, 47, 427-466. Fisman, R. (2001). Estimating the value of political connections. American Economic Review, 91, 1095-1102. Francis, J., Khurana, I., Pereira, R. (2005). Disclosure incentives and effect on cost of capital around the World. The Accounting Review, 80, 1125-1162. Frye, T., Shleifer, A. (1997). The invisible hand and the grabbing hand. American Economic Review, 87, 354-358. Frye, T., Zhuravskaia, E. (2000). Rackets, regulation and the rule of law. Journal of Law, Economics and Organization, 16, 478 -502. Gebhardt, W., Lee, C., Swaminathan, B. (2001). Towards an implied cost of capital. Journal of Accounting Research, 39, 135-176. Gode, D., Mohanram, P. (2003). Inferring the cost of capital using the Ohlson-Juettner model. Review of Accounting Studies, 8, 399-431. Hail, L., Leuz, C. (2006). International differences in cost of equity capital: do legal institutions and securities regulations matter? Journal of Accounting Research, 44, 485-531. He, L., Wan, H., Zhou, X., (2014). How are political connections valued in China? Evidence from market reaction to CEO succession. International Review of Financial Analysis. Li, H., Meng, L.,Wang, Q., & Zhou, L. (2008). Political connections, financing and firm performance: Evidence from Chinese private firms. Journal of Development Economics, 87, 283–299. Mobarak, A.M., Purbasari, D.P. (2006). Corrupt protection for sale to firms: evidence from Indonesia. Unpublished working paper, University of Colorado at Boulder. Nee, V. (1992). Organizational dynamics of market transition: Hybrid forms, property rights, and mixed economy in China. Administrative Science Quarterly, 37, 1–27. Reverte, C. (2009). Do better governed firms enjoy a lower cost of equity capital?: Evidence from Spanish firms. Corporate Governance, 9, 133-145. Shleifer, A., Vishny, R.W. (1994). Politicians and firms. Quarterly Journal of Economics, 46, 995-1025. Shleifer, A., Vishny, R.W. (1998). The grabbing hand: government pathologies and their cures. Cambridge, Massachusetts: Harvard University Press. Xiao, H., Xia, X. (2005). Government intervention, political connections and cost of equity capital. Huazhong University of Science and Technology. Yermack, D. (1996). Higher market valuation of companies with a small board of directors, Journal of Financial Economics, 40 (2), 185-211.||摘要:||
In this essay, I investigate the association between top executives political connections and the cost of equity capital using a sample of firms listed on Shanghai stock exchange. This essay finds that politically connected firms have a lower cost of equity capital than their non-connected counterparts, which is consistent with prior literature. I also find that when executives have been government officials, especially with higher ranks, the firms exhibit a lower cost of equity capital, especially lower for chairman with the higher ranks of civil servants and in larger firms. Moreover, my results suggest that the effect of political connections is stronger in larger firms regardless of types of ownership.
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