فساد محلی و نگهداشت وجه نقد شرکت های بزرگ
Abstract
Keywords
1. Introduction
2. Institutional background and hypothesis development
3. Research design
4. Empirical results
5. Robustness test
6. Conclusions
Funding
References
Vitae
Abstract
This study investigates the impact of corruption on corporate cash holdings in China. The political extraction argument predicts that firms might shelter liquid assets to avoid extraction by corrupt officials. Using data on A-shared listed firms between 2007 and 2012, we find that firms located in more corrupt regions hold less cash, supporting this hypothesis. Political resources help to diminish the risk of exploitation, reducing the extent to which liquid assets are sheltered. We find that the negative association between corruption and cash holding is more significant for non-state-owned enterprises (Non-SOEs) than for state-owned enterprises (SOEs). Moreover, the cash holdings of Non-SOEs without political connections are more sensitive to corruption than those of Non-SOEs with political connections. These findings demonstrate that expropriation by corrupt officials is an important factor driving firms to manage liquidity.
1. Introduction
Corruption has always been an eye-catching issue in both emerging economics and developed countries. Corruption damages market institutions and business systems and is considered ‘‘the biggest obstacle of economic and social development” (World Bank, 2000). A report from the World Economic Forum in 2013 documented that the total cost of corruption is about 260 billion dollars, more than 5% of global GDP and resulting in a 10% increase in business costs. Many papers discuss the impact of corruption on economic growth and social inequity at the macro level (Shleifer and Vishny, 1993; Mo, 2001). However, studies linking corruption to firm-level activities are still rare. Corruption is an important dimension of the institutional environment, and it harms market competition and breeds distortionary political-business relations. Corruption plays a vital role in determining corporate governance and organization behaviors (La Porta et al., 2000). Dass et al. (2017) document that corrupt cultures influence firm decisions by shaping business rules and relations. Smith (2016) examines the impact of official corruption on corporate financial policy and finds that local corruption motivates firms to shelter liquid asset. Paunov (2016) shows that political corruption increases the costs of gaining government innovation services and saps firms’ willingness to innovate. Sun (2014) states that government corruption greatly impacts firms’ tax avoidance strategies.