Capital Structure and Political Patronage: The Case of Malaysia
18 Pages Posted: 26 Jun 2007
Abstract
This paper extends prior work on the links between political patronage and capital structure in developing economies. Three proxies of political patronage are developed and applied to a group of Malaysian firms over a 10-year period. We find a positive and significant link between leverage and each of the three measures of political patronage. We also find evidence of an indirect link between political patronage and capital structure through firm size and profitability.
Keywords: Capital structure, Political patronage, Malaysia
JEL Classification: M49
Suggested Citation: Suggested Citation
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