The association between cost of debt and Hong Kong politically connected firms

Mark A Bliss,John A Goodwin,Ferdinand A Gul,Anson Wong

doi:10.1016/j.jcae.2018.10.001

The association between cost of debt and Hong Kong politically connected firms

Mark A Bliss, John A Goodwin + Show 2 more

https://doi.org/10.1016/j.jcae.2018.10.001

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Journal: Journal of Contemporary Accounting & Economics	Publication Date: Oct 13, 2018
Citations: 10

Affiliation: Hong Kong Polytechnic University, Sabancı University, Deakin University, Polytechnic University

#Politically Connected Firms #Cost Of Debt + Show 8 more

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Abstract

This paper investigates the association between Hong Kong politically connected (PCON) firms and their cost of debt and find these firms are associated with significantly lower interest rates being charged by lenders compared to other (non-PCON) firms. We compare our results with earlier investigations of Malaysian and U.S. PCON firms and find that our results are consistent with the results of the U.S. but inconsistent with that of Malaysia. Our results suggest that the economic wealth, the extent of political power, and the pervasiveness of firms having political connections could account for the cross-country differences between the cost of debt and PCON firms.

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