political-connections4.pdf (416.36 kB)
The effect of political connections on firm performance: evidence from Egypt
Purpose – This paper examines the effect of political connections (PCs) on firms’ profitability and market value in the Egyptian market after the uprising of 2013.
Design/methodology/approach – An empirical study is conducted based on 284 firm-year observations for non-financial listed firms on the EGX100 during the period of 2014‒2017. To test our hypothesis, two independent sample t-test, Pearson correlation analysis and OLS regressions are conducted.
Findings – The results suggest that PCs are common across all industries in Egypt, the PCs through top officers do not improve firm’s profitability; however, it has a positive effect on firms’ market value. Further, PCs through business owners improve neither profitability nor the market value. Finally, the results suggest that PCs through government ownership have a positive effect on both firms’ profitability and market value.
Research limitations/implications – Our finding encourages policymakers and regulators in emerging markets, e.g., Egypt, to develop stricter laws, policies, and regulatory initiatives to restrain the potential conflict of interest in the politically connected firms.
Originality/value – To the best of the authors’ knowledge, this study is one of the first to examine the relationship between PCs and both profitability and market value in Egypt.
History
School
- Business and Economics
Department
- Business
Published in
Asian Review of AccountingVolume
29Issue
3Pages
362-382Publisher
EmeraldVersion
- AM (Accepted Manuscript)
Rights holder
© EmeraldPublisher statement
This paper was accepted for publication in the journal Asian Review of Accounting and the definitive published version is available at https://doi.org/10.1108/ARA-05-2020-0064.Acceptance date
2021-06-18Publication date
2021-07-14Copyright date
2021ISSN
1321-7348Publisher version
Language
- en
Depositor
Dr Yasser Eliwa. Deposit date: 23 June 2021Usage metrics
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