Can anti-corruption reforms ease corporate financing constraints?—Empirical evidence from China

Abstract

ABSTRACT China has implemented its toughest anti-corruption policies in decades since late 2012. This paper empirically tests the economic spillover effect of anti-corruption from the perspective of corporate financing constraints based on the data from listed companies in China between 2010 and 2015. Our research shows that anti-corruption can significantly ease the financing constraints on enterprises. Due to China’s special system, the above relationship between anti-corruption and financing constraints is moderated by the nature of enterprise ownership and political connections. Furthermore, this study suggests that corporate financing constraints can be primarily eased by reducing bribery expenses and external financing frictions.