Characteristics of Politically Connected Firms in Indonesia
Problems and Perspective in Management, Vol. 15(4), 17-23, 2017. doi:10.21511/ppm.15(4).2017.02
8 Pages Posted: 21 Apr 2020
Date Written: December 14, 2014
This study investigates the types and characteristics of firms with politically connected directors in the boards of the company. The study uses data from all firms listed in Indonesia Stock Exchange spanning from 2004 to 2006. This study employs univariate analyses to address the research questions. The finding shows that firms with political connections are prevalence in chemical, infrastructure, investment, and miscellaneous industry. Furthermore, firm size is the only variable which significantly affects the probability of being politically connected firms. Specifically, larger firms are more likely to be politically connected. This study implies that the size of the firms is an important determinant in establishing political connections in Indonesia.
Keywords: rent seeking, political economy, industry studies, firm size, value of the firms
JEL Classification: D72, P16, L70, L25, G32
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