Political connections and corporate financial decision making

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dc.contributor.author Belghitar, Yacine
dc.contributor.author Clark, Ephraim
dc.contributor.author Saeed, Abubakr
dc.date.accessioned 2019-08-14T09:17:18Z
dc.date.available 2019-08-14T09:17:18Z
dc.date.issued 2018-11-16
dc.identifier.citation Belghitar Y, Clark E, Saeed A. (2019) Political connections and corporate financial decision making. Review of Quantitative Finance and Accounting, Volume 53, Issue 4, November 2019, pp. 1099-1133 en_UK
dc.identifier.issn 0924-865X
dc.identifier.uri https://doi.org/10.1007/s11156-018-0776-8
dc.identifier.uri http://dspace.lib.cranfield.ac.uk/handle/1826/14435
dc.description.abstract This paper investigates whether and how political connections influence managerial financial decisions. Our study reveals that those firms that have a politician on its board of directors are highly leveraged, use more long-term debt, hold large excess cash and are associated with low quality financial reporting compared to their non-connected counterparts. These effects escalate with the strength of the connected politician and whether he or his party is in power. The winning party effect is observed to be stronger than victory by the politician himself. Overall, our paper provides strong evidence that political connection is a two-edged sword. It is indeed a valuable resource for connected firms, but it comes at a cost of higher agency problems. en_UK
dc.language.iso en en_UK
dc.publisher Springer en_UK
dc.rights Attribution-NonCommercial 4.0 International *
dc.rights.uri http://creativecommons.org/licenses/by-nc/4.0/ *
dc.subject Political connection en_UK
dc.subject Earnings management en_UK
dc.subject Financial policies en_UK
dc.subject Emerging market en_UK
dc.title Political connections and corporate financial decision making en_UK
dc.type Article en_UK

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