Journal ArticleDOI
Do Politically Connected Boards Affect Firm Value
TLDR
In countries with a weak legal system and a high level of corruption, it has been shown that political connections are valuable to a corporation as mentioned in this paper, which is also true in the U.S., which has well-developed financial markets as well as a strong legal system.Abstract:
In countries with a weak legal system and a high level of corruption it has been shown that political connections are valuable to a corporation. This paper explores whether political connections are also important in the U.S., which has well-developed financial markets as well as a strong legal system. The paper uses an original hand-collected data set on the political connections of board members of S&P 500 companies to sort companies into those connected to the Republican Party and those connected to the Democratic Party. An analysis of the stock price response to the announcement of the board nomination of a politically connected director shows a positive abnormal stock return. The paper also analyses the stock price response to the Republican win in the 2000 Presidential Election and finds that companies connected to the Republican Party increase in value while companies connected to the Democratic Party decrease in value. The results further suggest that these effects are more pronounced for larger corporations. Finally, the paper controls for political donations by corporations prior to the 2000 election and finds that, unlike board connections, donations do not predict industry-adjusted abnormal post-election returns.read more
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Journal ArticleDOI
The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey
TL;DR: A survey of the literature on boards of directors, with an emphasis on research done subsequent to the Benjamin E. Hermalin and Michael S. Weisbach (2003) survey, can be found in this article.
Journal ArticleDOI
Corporate Political Contributions and Stock Returns
TL;DR: The authors developed a new and comprehensive database of firm-level contributions to U.S. political campaigns from 1979 to 2004, and constructed variables that measure the extent of firm support for candidates.
Journal ArticleDOI
The politics of government investment
Ran Duchin,Denis Sosyura +1 more
TL;DR: The authors investigated the relation between corporate political connections and government investment and found that politically connected firms are more likely to be funded, controlling for other characteristics, yet investments in politically connected companies underperform those in unconnected ones.
Journal ArticleDOI
Political connections and the cost of equity capital
TL;DR: Using propensity score matching models, it is found that politically connected firms enjoy a lower cost of equity capital than their non-connected peers, and that political connections are more valuable for firms with stronger ties to political power.
Journal ArticleDOI
Politically Connected Boards of Directors and the Allocation of Procurement Contracts
TL;DR: In this paper, the authors analyzed whether political connections of the boards of directors of publicly traded companies in the United States affect the allocation of government procurement contracts and found that companies with boards connected to the winning (losing) party experienced a significant and large increase (decrease) in procurement contracts after the election.
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Posted Content
Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Literature
TL;DR: This article surveys the economic literature on boards of directors and finds that board composition is not related to corporate performance, while board size has a negative relation with corporate performance and boards appear to evolve over time as a function of the bargaining power of the CEO relative to the existing directors.
Journal ArticleDOI
Politically Connected Firms
TL;DR: In this article, an examination of firms in 47 countries showed a widespread overlap of controlling shareholders and top officers who are connected with national parliaments or governments, particularly in countries with higher levels of corruption, with barriers to foreign investment, and with more transparent systems.
Journal ArticleDOI
Estimating the Value of Political Connections
TL;DR: In this article, the authors used the Jakarta Stock Exchange's reaction to news about former President Suharto's health to assess the value of political connections and found that as much as a quarter of a firm's share price may be accounted for by political connections.
Journal ArticleDOI
Politically connected firms
TL;DR: In this article, an examination of firms in 47 countries showed a widespread overlap of controlling shareholders and top officers who are connected with national parliaments or governments, particularly in countries with higher levels of corruption, with barriers to foreign investment, and with more transparent systems.
Journal ArticleDOI
Outside directors, board independence, and shareholder wealth☆
TL;DR: In this article, the authors examine the wealth effects surrounding outside director appointments and find no clear evidence that outside directors of any particular occupation are more or less valuable than others, consistent with the hypothesis that outside board members are chosen in the interest of shareholders.