Private enterprise identity and short-term debt for long-term investment: Evidence from China

Using a sample of private enterprises listed on China's A-shares from 2003 to 2021, we find that, identity issues increase the degree of short-term debt for long-term investments. Furthermore, mechanism tests indicate that identity issues aggravate the short-term debt for long-term investment by exacerbating information asymmetry, increasing operational risk and financing cost. We also reveal that the influence of identity issues weakens with high corporate analyst attention and strong board of directors' independence. The study contributes to the literature by examining the impacts of private enterprises' identity issues on financial decision-making from the evidence from China.