Premium
Political Connections and Leverage: Firm‐level Evidence from Pakistan
Author(s) -
Saeed Abubakr,
Belghitar Yacine,
Clark Ephraim
Publication year - 2015
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2674
Subject(s) - leverage (statistics) , politics , economics , business , monetary economics , financial economics , political science , mathematics , law , statistics
This study investigates the impact of political connections on corporate financing decisions using a sample of listed Pakistani firms over the period 2002–2010. We find a positive and significant link between long‐term debt and political connections, which reflects greater access to credit. Such preferential treatment escalates with the strength of the connected politician. Furthermore, positive effects of political connections are seen to be stronger for large firms and those affiliated with business groups. Copyright © 2014 John Wiley & Sons, Ltd.