US Governmental Sanctions and Financing Constraints of the Chinese Firms

Speaker：Li Donghui ，Professor, School of Economics, Shenzhen University

Host：Luo Danglun, Professor, Lingnan College

Time and Date：15:00, Nov. 28, 2023

Venue：Wang Daohan Meeting Room , Lingnan Hall (101） 

Language: English + Chinese

Abstract：

Based on the listed Chinese A-share firms spanning 2007 to 2021, this paper finds that the US governmental sanctions have seriously deteriorated their financing constraints. It is further shown that this adverse impact is more pronounced for those firms with greater risk exposure, while the following firm traits can alleviate financing constraints caused by sanctions: high market position, strong innovation and research capabilities, and effective government support policies. Moreover, the impact of the US governmental sanctions on the Chinese firms is shown to be mainly due to reduced corporate performance, raised financing costs, worsened corporate risks, and reduced market expectations. Various robustness and endogeneity tests confirm our main conclusions.