Government–Business Relations and Corporate Cash Holdings: Evidence from China*

Abstract

This study employs data from Chinese firms between 2017 and 2019 to explore how government-business relations affect corporate cash holdings. We find that healthy governmentbusiness relations have a significantly positive impact on corporate cash holdings. The mechanism test reveals that the former affects the latter via investment opportunities. Furthermore, product market competition positively moderates the relationship between government-business relations and corporate cash holdings, but financial constraints negatively moderate this relationship. The results of our research have implications for the government to optimize the quality of governance and for enterprises to adjust their business strategies.

Corporate digital transformation and financing constraints: The moderating effect of institutional investors

“…Information asymmetry and agency problems are widely acknowledged as the primary reasons for financing constraints [ 3 , 28 ]. Many studies have explored different ways of measuring financing constraints, such as the KZ index [ 28 ], the WW index [ 29 ], and the SA index [ 30 , 31 ]. Factors influencing financing constraints have been identified in the macroeconomic environment from the perspective of firm characteristics.…”