Political connections and corporate financial decision making

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dc.contributor.authorBelghitar, Yacine
dc.contributor.authorClark, Ephraim
dc.contributor.authorSaeed, Abubakr
dc.date.accessioned2019-08-14T09:17:18Z
dc.date.available2019-08-14T09:17:18Z
dc.date.issued2018-11-16
dc.description.abstractThis 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.identifier.citationBelghitar 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. 1099-1133en_UK
dc.identifier.issn0924-865X
dc.identifier.urihttps://doi.org/10.1007/s11156-018-0776-8
dc.identifier.urihttp://dspace.lib.cranfield.ac.uk/handle/1826/14435
dc.language.isoenen_UK
dc.publisherSpringeren_UK
dc.rightsAttribution-NonCommercial 4.0 International*
dc.rights.urihttp://creativecommons.org/licenses/by-nc/4.0/*
dc.subjectPolitical connectionen_UK
dc.subjectEarnings managementen_UK
dc.subjectFinancial policiesen_UK
dc.subjectEmerging marketen_UK
dc.titlePolitical connections and corporate financial decision makingen_UK
dc.typeArticleen_UK

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