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Does a firm's political connection to government have economic value?

This paper reports new findings about differential impacts political events have on share prices of firms connected to government in power compared to firms with no political connections. Political connection has been alleged as valuable in popular press in this mid-income economy studied, so it is...

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المؤلفون الرئيسيون: Chen, Chow Meng, Ariff, Mohamed, Hassan, Taufiq, Mohamad, Shamsher
التنسيق: مقال
اللغة:English
منشور في: Routledge 2013
الوصول للمادة أونلاين:http://psasir.upm.edu.my/id/eprint/28344/1/Does%20a%20firm.pdf
http://psasir.upm.edu.my/id/eprint/28344/
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id my.upm.eprints.28344
record_format eprints
spelling my.upm.eprints.283442015-09-11T03:01:45Z http://psasir.upm.edu.my/id/eprint/28344/ Does a firm's political connection to government have economic value? Chen, Chow Meng Ariff, Mohamed Hassan, Taufiq Mohamad, Shamsher This paper reports new findings about differential impacts political events have on share prices of firms connected to government in power compared to firms with no political connections. Political connection has been alleged as valuable in popular press in this mid-income economy studied, so it is worth an investigation. Significant share price increases of 4% or more abnormal returns accrue to connected firms relative to unconnected firms when identical political events occur. The impact is very pronounced during a severe economic crisis, when the stakes were high about an incumbent government being re-elected. Our finding of higher value of politically connected firms is due to the expected value of preferential treatments, preference in project selections and access to state benefits. Thus, share prices of politically connected firms react with greater impacts than non-politically connected firms to announcements of identical political events. Routledge 2013 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/28344/1/Does%20a%20firm.pdf Chen, Chow Meng and Ariff, Mohamed and Hassan, Taufiq and Mohamad, Shamsher (2013) Does a firm's political connection to government have economic value? Journal of the Asia Pacific Economy, 18 (3). pp. 477-501. ISSN 1354-7860; ESSN: 1469-9648 10.1080/13547860.2012.742674
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description This paper reports new findings about differential impacts political events have on share prices of firms connected to government in power compared to firms with no political connections. Political connection has been alleged as valuable in popular press in this mid-income economy studied, so it is worth an investigation. Significant share price increases of 4% or more abnormal returns accrue to connected firms relative to unconnected firms when identical political events occur. The impact is very pronounced during a severe economic crisis, when the stakes were high about an incumbent government being re-elected. Our finding of higher value of politically connected firms is due to the expected value of preferential treatments, preference in project selections and access to state benefits. Thus, share prices of politically connected firms react with greater impacts than non-politically connected firms to announcements of identical political events.
format Article
author Chen, Chow Meng
Ariff, Mohamed
Hassan, Taufiq
Mohamad, Shamsher
spellingShingle Chen, Chow Meng
Ariff, Mohamed
Hassan, Taufiq
Mohamad, Shamsher
Does a firm's political connection to government have economic value?
author_facet Chen, Chow Meng
Ariff, Mohamed
Hassan, Taufiq
Mohamad, Shamsher
author_sort Chen, Chow Meng
title Does a firm's political connection to government have economic value?
title_short Does a firm's political connection to government have economic value?
title_full Does a firm's political connection to government have economic value?
title_fullStr Does a firm's political connection to government have economic value?
title_full_unstemmed Does a firm's political connection to government have economic value?
title_sort does a firm's political connection to government have economic value?
publisher Routledge
publishDate 2013
url http://psasir.upm.edu.my/id/eprint/28344/1/Does%20a%20firm.pdf
http://psasir.upm.edu.my/id/eprint/28344/
_version_ 1643829437149478912
score 13.251813

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