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Political affiliation, cash flow volatility, and debt maturity in China

journal contribution
posted on 2024-01-11, 13:21 authored by Mustafa Cagalyan, Simona Mateut, Piercarlo Zanchettin

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.

History

Author affiliation

School of Business, University of Leicester

Version

  • AM (Accepted Manuscript)

Published in

British Accounting Review

Publisher

Elsevier

issn

0890-8389

Copyright date

2023

Available date

2025-12-23

Language

en

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