Essays on political factors in corporate finance

Wu, Yuxuan (2026) Essays on political factors in corporate finance. PhD thesis, University of Glasgow.

Abstract

This thesis examines how political factors shape corporate financial decision-making across three empirical studies. Political forces enter the firm through distinct channels, whether actively pursued through lobbying, passively experienced as external risk, or embedded in firm leadership through executive-level political connections. Each channel affects a different set of corporate decisions, and the mechanisms involved differ across political forms and institutional settings. The three studies span US private capital markets, US publicly listed firms, and Chinese A-share listed firms, and consider how political factors alter the information available to decision-makers, the incentives under which they act, and the institutional resources to which firms gain access.
The first study examines the association between PE and VC firms' lobbying and their investment behaviour over the period 2004 to 2023. Lobbying is positively and significantly associated with deal frequency, while PAC contributions show no comparable association. The heterogeneity analysis distinguishes among information acquisition, policy concession, and partisan network explanations. The evidence is most consistent with information acquisition. The association strengthens under higher economic policy uncertainty and partisan conflict but weakens during election periods and is concentrated among independent PE firms rather than VC or corporate venture capital firms.
Shifting from political engagement to political risk, the second study investigates whether firm-level political risk affects the likelihood of forced CEO turnover among US listed firms over the period 2002 to 2021. Higher political risk is associated with a lower probability of dismissal. The moderation analysis provides evidence consistent with two channels. Attribution difficulty is supported by evidence that the association strengthens when board monitoring capacity is more constrained and weakens when the firm has greater access to political information. Replacement cost is supported by the finding that the association largely disappears when a viable internal successor is available. The association is concentrated when political risk is increasing rather than stable.
In the Chinese institutional setting, the third study examines the association between executive-level political connections and investment-financing maturity mismatch among A-share listed firms from 2008 to 2023 and finds that politically connected firms exhibit wider maturity mismatch. The decomposition locates this association primarily in smaller increases in long-term debt and equity relative to investment, rather than in higher long-term investment expenditure. The association weakens as institutional ownership increases, whereas greater asset tangibility strengthens it. Viewed alongside prior evidence linking political connections to longer debt maturity, these findings indicate that more favourable financing terms do not necessarily produce closer alignment between investment and financing horizons. Political connections may therefore ease one financing friction while increasing exposure to another.
Across the three studies, the baseline associations are robust to alternative variable measurement, model specification changes, and sensitivity analysis. The heterogeneity analyses in each chapter help distinguish among competing explanations and identify the conditions under which political factors are relevant to the corporate decisions under examination. The findings suggest that political factors shape corporate decisions differently across political channels, decision domains, and institutional settings, and that the information, incentives, and access conditions that firms face play a central role in these associations.

• Item Type: Thesis (PhD)
• Qualification Level: Doctoral
• Subjects: H Social Sciences > HG Finance; J Political Science > JA Political science (General)
• Colleges/Schools: College of Social Sciences > Adam Smith Business School
• Supervisor's Name: Vinogradov, Professor Dmitri and Lavery, Dr. Paul
• Date of Award: 2026
• Depositing User: Theses Team
• Unique ID: glathesis:2026-86279
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 27 Oct 2026 11:06
• Last Modified: 27 Oct 2026 11:10
• Thesis DOI: 10.5525/gla.thesis.86279
• URI: https://theses.gla.ac.uk/id/eprint/86279