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

Caglayan, Mustafa; Mateut, Simona; Zanchettin, Piercarlo

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.

Citation

Caglayan, M., Mateut, S., & Zanchettin, P. (2023). Political affiliation, cash flow volatility, and debt maturity in China. British Accounting Review, Article 101299. https://doi.org/10.1016/j.bar.2023.101299

• Journal Article Type: Article
• Acceptance Date: Dec 17, 2023
• Online Publication Date: Dec 23, 2023
• Publication Date: Dec 23, 2023
• Deposit Date: Dec 18, 2023
• Publicly Available Date: Dec 24, 2025
• Journal: British Accounting Review
• Print ISSN: 0890-8389
• Electronic ISSN: 1095-8347
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Article Number: 101299
• DOI: https://doi.org/10.1016/j.bar.2023.101299
• Keywords: Debt maturity, Political affiliation, Cash flow volatility, Panel fractional response regression, Political connections
• Public URL: https://nottingham-repository.worktribe.com/output/28705216
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S0890838923001610?via%3Dihub
• Additional Information: This article is maintained by: Elsevier; Article Title: Political affiliation, cash flow volatility, and debt maturity in China; Journal Title: The British Accounting Review; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.bar.2023.101299