Directors’ Political Connections and Compliance with Board of Directors Regulations: The Case of S&P/Tsx 300 Companies

Abstract

Further to the various scandals that shook North-American markets in the early 2000s, Canada reacted in 2004 and 2005 by changing its regulations on the governance practices of listed companies. Faccio (2006) and other authors have argued that politically connected companies can have less regulatory oversight than unconnected firms. This affirmation raises an issue that this article attempts to solve, i.e., whether politically connected Canadian companies are less compliant with regulatory requirements on governance than unconnected firms, and with board of directors requirements in particular. Although politically connected and unconnected firms differ significantly in their compliance with regulation, the analyses show that the state of being politically connected tends to have little bearing on regulatory compliance.

S&P/TSX 300 Companies’ Political Connections, Compliance with Board of Directors Regulations and Financial Performance

“…1;2015 In view of the fact that US listing seems to influence firm compliance with board regulations, there is a very significant difference between US listed and unlisted firms in terms of their compliance with board regulations. This finding is consistent with past studies (Khemakhem & Dicko, 2013) which showed that US corporate governance regulations are more stringent than Canadian regulations. According to ANOVA results, there is a significant difference between politically connected and non-connected firms in terms of financial performance (measured by ROA, ROE and MTB).…”

“…This finding corroborates the results of Khemakhem and Dicko's study (2013) of a similar Canadian sample. Khemakhem and Dicko (2013) found that US market listing influences Canadian firms' compliance with governance regulations in view of the greater stringency of US regulations. According to Table 4, no significant differences were found between politically connected vs. non-connected firms among those listed on the US market; in other words, being listed on the US market did not influence the firms' political connections behaviour.…”

Antecedents of supplier selection decisions in the public sector in Nigeria

“…The existence of such rules and codes should ensure due process and accountability in public procurement. However, given the resource-dependence and quid pro quo relationship existing between the political system and public sector firms (Khemakhem & Dicko, 2013;You & Du, 2013;Reich, 2009), as well as the pervasively negative and self-seeking nature of party politics (Roman, 2017(Roman, , 2014Wright, 2004), this study posits that supplier selection decisions will be associated with instrumental ethical work climates (the shared perception that organizational norms promote egoistic tendencies during 16 ANTECEDENTS OF SUPPLIER SELECTION DECISIONS decision-making), irrespective of the existence of 'strict' rules. Furthermore, given that organizational actors use their personal values and beliefs as a basis for making decisions (Roman, 2017(Roman, , 2014Sousa et al, 2003), it is not far-fetched to suggest that the instrumental ethical work climates prevalent in 'politicized' work environments such as most public sector firms (Roman, 2017) will be associated with self-enhancing personal values (also defined as the promotion of self-seeking tendencies and parochial personal interests).…”

Firms Political Connections and Winning Government Contracts

“…Since certain regulations in the US (e.g. on corporate governance) are more stringent than in Canada, Canadian companies behave differently when listed on US financial markets (Khemakhem & Dicko, 2013;Dicko & Khemakhem, 2015). We therefore decided to include this variable in our study, using a dummy variable valued at 1 if the company is listed on US markets and 0 otherwise.…”