The Political Connections and Commercial Credit Financing of Privately Held Companies

Abstract

In order to better assist privately held companies in obtaining commercial credit financing, this article selected 1,000 Chinese privately held companies in the manufacturing industry that went public from 2008 to 2018 and discussed whether a company’s political connections serve as a resource-promoting effect on its commercial credit financing. This article proposed relevant hypotheses based on theoretical analysis and performed the descriptive statistical analysis and Hausman test analysis on all variables based on the unbalanced panel data of public companies when designing the study. Then, this article used a fixed model for regression estimation of the main effects, and the results showed that a company's political connections significantly reduce its possibility of obtaining commercial credit from suppliers. This article further analyzed the regulatory effects of market environmental factors and corporate transparency-related boundary factors and concluded that the process of marketization, the degree of market competition, and the transparency of companies will significantly weaken the inhibiting effect of political connections on commercial credit financing.