This article mainly discusses the impact of anti-corruption campaigns, political connections, ownership structure on investment cash flow sensitivity, and empirical analysis using Shanghai and Shenzhen listed companies in mainland China from 2008 to 2020. There are six Hypothesis,H1: Political connections will increase the investment cash flow sensitivity ; H2-1: State-owned enterprises with political connections will reduce the investment cash flow sensitivity ; H2-2 : Domestic enterprises with political connections will reduce the investment cash flow sensitivity ; Hypothesis H2-3: Foreign enterprises with political connections will reduce the investment cash flow sensitivity ; Hypothesis H2-4: Family enterprises with political connections will reduce investment cash flow sensitivity; Hypothesis H3: Anti-corruption campaigns moderate the effects of political connections and ownership structure on investment cash flow sensitivity.
This paper empirically finds that political connections will increase the investment cash flow sensitivity. After adding ownership structure , state-owned enterprises, domestic enterprises, and family enterprises will reduce investment cash flow sensitivity , while foreign enterprises will not be affected. After the anti-corruption campaign, domestic enterprises and family enterprises would be affected by political connections and reduce the investment cash flow sensitivity, while state-owned enterprises and foreign enterprises would not be affected. The findings of this paper contribute to corporate governance and management practices in emerging markets, when managers embed the benefits of political connections due to market imperfections, they need to consider the potential costs and benefits of political connections and apply them accordingly.
