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Financial constraints and political catering disclosures of non‐state‐owned firms: Evidence from textual analysis

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  • Dongmin Kong
  • Lu Shi

Abstract

Using textual analysis techniques, we construct a novel measure to quantify the level of political information in forward‐looking disclosures of privately controlled firms. Our results show that private firms with serious financial constraints are more likely to reveal more political information in forward‐looking disclosures. Plausible mechanisms driving our findings are firms' high growth, under‐investment, and weaker political connections, suggesting that firms cater to governments in the expectation of more financing resources. Finally, we show the economic consequences of political catering strategy on corporate performance.

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  • Dongmin Kong & Lu Shi, 2023. "Financial constraints and political catering disclosures of non‐state‐owned firms: Evidence from textual analysis," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 4533-4563, December.
    • Handle: RePEc:bla:acctfi:v:63:y:2023:i:4:p:4533-4563
    DOI: 10.1111/acfi.13107
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