The Role Political Connections Play in Access to Finance: Evidence from Cross-Listing
نویسندگان
چکیده
What role does political influence play in access to finance? Using a comprehensive crosscountry dataset, I characterize how and why domestic political connections affect firms’ ability to access all types of finance—exploiting firms’ cross-listing activity as a source of empirical identification. The results extend our understanding from recent single-country studies focused exclusively on domestic bank finance. First, political influence improves firms’ access to finance beyond domestic (bank) debt markets—political connections also improve access to foreign, equity finance. Second, the mechanism through which political influence works to improve access to finance is broader than political coercion of local bankers—political connections function as a firm-level substitute for strong national property rights, reducing connected firms risk premiums vis-à-vis unconnected peers.
منابع مشابه
The Strategic Role Firms’ Political Connections Play in Access to Finance: Coercion of Domestic Banks or Implicit Property Rights Protections?
What role does political influence play in access to finance? Does this role differ across markets? Using a comprehensive cross-country dataset, I characterize how and why domestic political connections affect firms’ propensities to cross-list securities abroad. Connected firms have better access to foreign capital markets; moreover, the effect of connections is magnified for firms located in c...
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