Political Connections, Debt Restructuring, and Enterprise Investment: Evidence from China

Table 1

Definition of variables used in this paper.

Names	Notation	Definition
Investment expenditure	INV	Ratio of capital expenditure to total assets.
Investment efficiency	ABSINV	ABSINV is the absolute value of the residual term of regression in which the newly increased investment in the current period is the dependent variable, indicating the investment efficiency. The larger the value, the greater the deviation between the actual investment and the expected investment, which means lower investment efficiency.
Overinvestment	EXINV	EXINV is a residual term above 0, that is, the actual investment is greater than the expected investment, indicating overinvestment. The higher the value, the more severe of overinvestment.
Underinvestment	UNINV	UNINV is the residual term below 0, that is, the actual investment is below the expected investment, and its absolute value is used to measure the underinvestment. The higher the value, the more severe of underinvestment.
The dummy variable for debt restructuring	DRD	Represents the dummy variable for debt restructuring, which is equal to 1 if an enterprise carries out debt restructuring, otherwise it is 0.
The dummy variable for the period of debt restructuring	TIME	Represents a dummy variable for the period of debt restructuring, with a value equal to 0 for the period before debt restructuring and 1 for the period after debt restructuring.
Political connection	GI	If an enterprise’s CEO or chairman is or has been a government official, provincial, or ministerial politician, or military officer, the enterprise is considered politically connected, and the dummy variable equals 1, otherwise 0.
Strength of political connection	MI1	It is divided into low, middle, and high levels based on the government index. If the strength of political connection is low, the dummy variable equals 1, otherwise 0.
Leverage ratio	LEV	Ratio of total liabilities to total assets.
Cash flow	CF	Balance of cash and cash equivalents at the end of the period.
Tobin’s Q	Q	(Market value of equity + total liabilities)/total assets
Equity balance	CSTR	Logarithmic sum of squares of shareholdings of the second to tenth largest shareholders.
Director independence	RID	Ratio of number of independent directors to total number of directors.
Regulators holdings	ESH	Management shareholding ratio.
Board size	BOARD	Total number of directors.
Listing time	AGE	Listing time of the enterprise.
Enterprise size	SIZE	Natural logarithm of total assets.