Political Connection and Firm Value. Asian Development Review, Vol. 30(2), pp. 131–166
Ang, James S.; Ding, David K.; Thong, Tiong Yang | August 2013
Abstract
We study the effect of political connection (PC) on company value in an environment
where low PC is due to better institutions and not confounded by
favorable social/cultural factors. We find that in Singapore, the only country
that fits this description, PC in general adds little to the value of a company.
However, in industries that are subject to more stringent government regulations,
PC appears to be somewhat important. Robustness checks show that alternative
PC variables give rise to similar results, and the addition of control variables
do not drastically change the findings. Politically connected firms have higher
managerial ownership and tend to be smaller than non-PC firms, rendering them
more susceptible to poorer governance practices. We show that the presence
of politically connected directors somewhat neutralizes such potential negative
effects. PC firms are associated with good governance practices such as nonduality
in their chairman and chief executive officer positions and fewer executive
directors.
Citation
Ang, James S.; Ding, David K.; Thong, Tiong Yang. 2013. Political Connection and Firm Value. Asian Development Review, Vol. 30(2), pp. 131–166. © Asian Development Bank and Asian Development Bank Institute. http://hdl.handle.net/11540/1620. License: CC BY 3.0 IGO.Citable URI
http://hdl.handle.net/11540/1620Metadata
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