How do corporate political connections influence financial reporting? A synthesis of the literature

50 Pages Posted: 18 Jun 2019 Last revised: 3 May 2021

See all articles by Susanne Preuss

Susanne Preuss

University of Amsterdam

Roland Koenigsgruber

SKEMA Business School

Date Written: 2021

Abstract

A large stream of research has analyzed the effects of corporate political connections (CPCs) on firms, including first evidence on their effects on financial reporting behavior. However, the evidence so far is inconclusive, and attempts to explain the causality of effects on reporting are limited. In this article, we present the results of a systematic review of the literature on CPCs. We draw on findings in the accounting, finance, and economics literature and derive a framework that identifies four channels through which CPCs affect financial reporting. Our review of the literature suggests that effects of political connections tend to be more ambiguous than suggested by individual studies that often offer directional hypotheses. We also identify eight distinct types of political connectedness and discuss their interrelations and the proxies used in the literature to measure them.

Keywords: Corporate Political Connections, Literature Review, Financial Reporting

JEL Classification: M41, M48, G38

Suggested Citation

Preuss, Susanne and Koenigsgruber, Roland, How do corporate political connections influence financial reporting? A synthesis of the literature (2021). Journal of Accounting and Public Policy, Volume 40 (1), 106802, Available at SSRN: https://ssrn.com/abstract=3402044 or http://dx.doi.org/10.2139/ssrn.3402044

Susanne Preuss (Contact Author)

University of Amsterdam ( email )

Amsterdam Business School
Plantage Muidergracht 12
Amsterdam, 1018 TV
Netherlands

Roland Koenigsgruber

SKEMA Business School ( email )

Lille
France

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