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http://ssrn.com/abstract=1242402
 
 

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The Impact of Political Connections on Firms' Operation Performance and Financing Decisions


Narjess Boubakri


American University of Sharjah - School of Business and Management; HEC Montreal - Department of Finance

Jean-Claude Cosset


HEC Montreal

Walid Saffar


Hong Kong Polytechnic University - School of Accounting and Finance

November 29, 2011

21st Australasian Finance and Banking Conference 2008 Paper

Abstract:     
We investigate the impact that the political connections of publicly traded firms have on their performance and financing decisions. Using a long-term event study covering a sample of 234 politically connected firms headquartered in 12 developed and 11 developing countries over the period 1989 to 2003, we find that firms increase their performance and indebtedness after the establishment of a political connection. We also find that the political connection is more strongly associated with changes in leverage and operating performance for firms with closer ties to political power. Overall, our study confirms that politically connected firms gain easier access to credit and reap benefits in terms of performance from their ties with politicians.

Number of Pages in PDF File: 41

Keywords: Political connections, Performance, Event study

JEL Classification: G32, G38

working papers series





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Date posted: August 23, 2008 ; Last revised: November 29, 2011

Suggested Citation

Boubakri, Narjess and Cosset, Jean-Claude and Saffar, Walid, The Impact of Political Connections on Firms' Operation Performance and Financing Decisions (November 29, 2011). 21st Australasian Finance and Banking Conference 2008 Paper. Available at SSRN: http://ssrn.com/abstract=1242402 or http://dx.doi.org/10.2139/ssrn.1242402

Contact Information

Narjess Boubakri
American University of Sharjah - School of Business and Management ( email )
P.O. Box 26666
Sharjah
United Arab Emirates
HOME PAGE: http://www.aus.edu
HEC Montreal - Department of Finance ( email )
3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
Jean-Claude Cosset (Contact Author)
HEC Montreal ( email )
3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
514-340-6872 (Phone)
514-340-6987 (Fax)
Walid Saffar
Hong Kong Polytechnic University - School of Accounting and Finance ( email )
Li Ka Shing Tower
Hong Hum
Kowloon
Hong Kong
Feedback to SSRN


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