The impact of local government financing vehicles debt on corporate risk-taking: Evidence from China

Abstract

Local government financing vehicles (LGFVs) significantly influence enterprise sustainability and growth. However, the extent to which LGFVs debt affects corporate risk-taking remains unclear. Utilizing data from A-share listed companies from 2010 to 2020, this study examines LGFVs debt's influence on corporate risk-taking and the modulatory effect of land transfer income. Findings indicate that LGFVs debt generally curtails corporate risk-taking, but this effect is moderated by land transfer income. Notably, the impact of LGFVs debt on risk-taking varies across enterprises, exerting a more pronounced effect on smaller firms than on larger ones.