Journal ArticleDOI
Political connection and cost of debt: Some Malaysian evidence
TLDR
In this paper, the authors investigated the association between Malaysian politically connected (PCON) firms and the cost of debt, and found that PCON firms have a significantly higher extent of leverage, a higher likelihood of reporting a loss, a high likelihood of having negative equity, and a higher probability of being audited by a big audit firm.Abstract:
This paper investigates the association between Malaysian politically connected (PCON) firms and the cost of debt. We extend previous research that finds Malaysian PCON firms are perceived as being of higher risk by the market, and by audit firms, by providing evidence that lenders also perceive these firms as being of higher risk. We also find that PCON firms have a significantly (1) higher extent of leverage, (2) higher likelihood of reporting a loss, (3) higher likelihood of having negative equity, and (4) higher likelihood of being audited by a big audit firm. We suggest that PCON firms are charged higher interest rates by lenders as a result of efficient contracting given their higher inherent risks. Additionally, we find that CEO duality present in PCON firms is perceived by lenders as being more risky, and that a higher proportion of independent directors on the audit committee mitigate this perceived risk.read more
Citations
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Journal ArticleDOI
Government connections and financial constraints : evidence from a large representative sample of Chinese firms
TL;DR: The authors examine the role of firms' government connections, defined by government intervention in CEO appointment and the status of state ownership, in determining the severity of financial constraints faced by Chinese firms.
Journal ArticleDOI
Corporate lobbying, political connections, and the bailout of banks
TL;DR: This paper found that politically engaged firms were not only more likely to receive TARP funds, but also received a greater amount of TARP support and received the support earlier than firms that were not politically involved.
Journal ArticleDOI
Political connections and corporate investments: Evidence from the recent anti-corruption campaign in China
Xiaofei Pan,Gary Gang Tian +1 more
TL;DR: In this paper, the ousting of corrupt politicians and firms connected with them through bribery and personal relationships (event firms) was studied, and it was found that investment expenditure of event firms declines significantly after ousting the politicians compared with that of non-event firms.
Journal ArticleDOI
Political Activity and Firm Performance within Nonmarket Research: A Review and International Comparative Assessment
TL;DR: In this article, a systematic review examines scholarly articles for evidence of the impact of CPA on firm value and finds that CPA is more valuable in emerging countries and that relational CPA strategies are more common in emerging (versus developed) countries where social capital underlies political and economic exchange.
Journal ArticleDOI
Political activity and firm performance within nonmarket research: A review and international comparative assessment
TL;DR: In this paper, a systematic review examines scholarly articles for evidence of the impact of CPA on firm value and finds that CPA is more valuable in emerging countries and that relational CPA strategies are more common in emerging (versus developed) countries where social capital underlies political and economic exchange.
References
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Book
Institutions, Institutional Change and Economic Performance
TL;DR: Douglass C. North as discussed by the authors developed an analytical framework for explaining the ways in which institutions and institutional change affect the performance of economies, both at a given time and over time.
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Institutions, Institutional Change, and Economic Performance
Douglass C. North,John Alt +1 more
TL;DR: In this article, the authors examine the role that institutions, defined as the humanly devised constraints that shape human interaction, play in economic performance and how those institutions change and how a model of dynamic institutions explains the differential performance of economies through time.
Journal ArticleDOI
A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity
TL;DR: In this article, a parameter covariance matrix estimator which is consistent even when the disturbances of a linear regression model are heteroskedastic is presented, which does not depend on a formal model of the structure of the heteroSkewedness.
Journal ArticleDOI
The Benefits of Lending Relationships: Evidence from Small Business Data
TL;DR: In this article, the authors empirically examined how ties between a firm and its creditors affect the availability and cost of funds to the firm and found that the primary benefit of building close ties with an institutional creditor is that the availability of financing increases.
Book
Positive Accounting Theory
TL;DR: In this article, the authors review the theory and methodology underlying the economics-based empirical literature in accounting and discuss the role of theory in empirical work and the extent to which the theories are consistent with those studies' evidence.