Political connections and government subsidies of the companies falling into financial distress-Empirical evidence from Chinese ST listed companies

Using the samples of ST companies listed in Shanghai and Shenzhen Stock Exchange from the year 2002 to 2007, this paper empirically studies the influences of the companies' political connection on how the companies falling into financial distress gains the government subsidies. The conclusions are as follows: when private companies fall into financial distress, its political connection has significant effect on the gaining of government subsidies; but it is insignificant for state-owned enterprises.