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Corporate political connections and the 2008 Malaysian election
journal contribution
posted on 2015-05-01, 00:00 authored by Simon FungSimon Fung, Ferdinand GulFerdinand Gul, S RadhakrishnanWe examine whether the relationship between political connections and firm value is moderated by the length of time firms have been politically connected. We find that compared to firms with political connections for a short period, firms with political connections for a long period have a smaller magnitude of negative stock price reaction to the 2008 General Election loss of the supermajority by the ruling party in Malaysia. We also find that the smaller magnitude of negative stock price reaction is, in part, attributable to improvements in board of director characteristics. Furthermore, we find that while the performance subsequent to the General Election of politically connected firms is worse than that of non-politically connected firms, firms with political connections for a long period exhibit better performance than those connected for short periods. Collectively, the evidence shows that the length of political connections is an important factor that moderates economic value.
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Journal
Accounting, organizations and societyVolume
43Pagination
67 - 86Publisher
ElsevierLocation
Amsterdam, The NetherlandsPublisher DOI
ISSN
0361-3682Language
engPublication classification
C1.1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2015, ElsevierUsage metrics
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