The association between cost of debt and Hong Kong politically connected firms
Bliss, Mark A. and Goodwin, John and Gul, Ferdinand A. and Wong, Anson (2018) The association between cost of debt and Hong Kong politically connected firms. Journal of Contemporary Accounting and Economics, 14 (3). pp. 321-334. ISSN 1815-5669
Official URL: http://dx.doi.org/10.1016/j.jcae.2018.10.001
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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