Universal Journal of Accounting and Finance Vol. 5(2), pp. 37 - 45
DOI: 10.13189/ujaf.2017.050201
Reprint (PDF) (346Kb)

Do Political Connections Decrease Financial Flexibility Reserves? Evidence from Chinese Private Firms

Zi-xu Liu ^*
School of Accounting, Heilongjiang Bayi Agriculture University, China

ABSTRACT

This paper examines the impact of political connections on financial flexibility of private firms in China. Using a nationwide survey of Chinese private firms, we find that political connections can decrease financial flexibility reserves when financial constraint, environmental uncertainty and other variables are controlled. We further find that the high strength of political connections decreases more financial flexibility reserves than the low strength of political connections does.

KEYWORDS
Political Connection, Financial Flexibility, Private Firm

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Zi-xu Liu , "Do Political Connections Decrease Financial Flexibility Reserves? Evidence from Chinese Private Firms," Universal Journal of Accounting and Finance, Vol. 5, No. 2, pp. 37 - 45, 2017. DOI: 10.13189/ujaf.2017.050201.

(b). APA Format:
Zi-xu Liu (2017). Do Political Connections Decrease Financial Flexibility Reserves? Evidence from Chinese Private Firms. Universal Journal of Accounting and Finance, 5(2), 37 - 45. DOI: 10.13189/ujaf.2017.050201.