The Association between Cost of Debt and Hong Kong Politically Connected Firms

52 Pages Posted: 16 Oct 2016

See all articles by Mark Bliss

Mark Bliss

Hong Kong Polytechnic University

Anson Wong

Hong Kong Polytechnic University

John Goodwin

Corvinus University

Date Written: October 14, 2016

Abstract

This paper investigates the association between Hong Kong politically connected firms and their cost of debt. We extend the knowledge of this association by comparing our results with those of Bliss and Gul (2012) who used Malaysian data to examine it. We find that Hong Kong politically connected firms have lower interest rates than non politically connected firms. Our result contrasts with Bliss and Gul (2012), but is consistent with the result of Houston, Jiang, Lin and Ma (2014) who used U.S. data. We argue that these contrasting results can be attributed to differences in the levels of lending institution sophistication, and of economic wealth and development between Hong Kong and the U.S. on the one hand and Malaysia on the other.

Keywords: Political connection, Debt cost

JEL Classification: D72, G32

Suggested Citation

Bliss, Mark and Wong, Anson and Goodwin, John, The Association between Cost of Debt and Hong Kong Politically Connected Firms (October 14, 2016). Available at SSRN: https://ssrn.com/abstract=2852434 or http://dx.doi.org/10.2139/ssrn.2852434

Mark Bliss (Contact Author)

Hong Kong Polytechnic University ( email )

9/F, Li Ka Shing Tower
The Hong Kong Polytechnic University
Hong Kong, Hung Hom, Kowloon
China
852 6273 7022 (Phone)
852 2356 9550 (Fax)

Anson Wong

Hong Kong Polytechnic University ( email )

11 Yuk Choi Rd
Hung Hom
Hong Kong

John Goodwin

Corvinus University ( email )

Fővám tér 8
Budapest, 1054
Hungary

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