Political Connection, Board Characteristics and Firm Performance in Nigeria

Abstract

This study examines the relationship between political connection, board characteristics and firm performance in Nigerian quoted firms. The model of the study is built based on the agency theory. It utilises a cross-sectional data of 116 firms for the year 2013, obtained from the annual reports of the firms. The robust corrected standard error regression was used in estimating the model. The study provides partial support for the proposition of the agency theory. The study finds board gender positively related to firm performance, while political connections and CEO incentives were negatively related with firm performance. The findings of this study should interest organisational stakeholders. Particularly, the negative association of political connection with firm performance has implication for auditors, shareholders and management. Furthermore, the study recommends more females to be considered into directorship positions, since they play a significant role in shaping the transparency of the board for better performance.

CEO characteristics and firm performance: evidence from private listed firms in China

“…In Chinese firms, having political connections can harm firm performance (Liu et al , 2013), which implies that maintaining relationships with government officials requires significant financial resources and thus limit firms’ ability to engage in innovative activities. Osazuwa et al (2016) also showed a negative relationship between political affiliation and firm performance on Nigerian firms. Similarly, Chancharat et al (2019) viewed political connections as a business risk that leads to corruption and affects company operations, resulting in poor performance among a sample of nonfinancial listed companies in Thailand.…”

The Political Connections and Firm Performance on Global Fortune 500 Oil and Gas Companies

“…In 1971, they joined the Organization of Petroleum Exporting Countries (OPEC), and in 1977, they founded the National Petroleum Corporation (NNPC), which became a key player in the upstream and downstream sectors under the sole authority of a state-owned enterprise. According to Osazuwa (2016), the activities of CPCs in Nigeria have a great impact on company performance, particularly in terms of national economic development and other benefits, which indirectly serve as a wake-up call to other non-politically connected firms. Many research has now found the participation of CPCs, and it has become an in-thing practise for industry that desire to benefit from the connections.…”

Pengaruh kepemilikan negara, hubungan politik dan penghindaran pajak terhadap kinerja keuangan di Indonesia

“…Perusahaan menjadi lebih mudah jika ada anggota partai politik di perusahaan mereka yang juga menjadi pejabat di pemerintahan dimana pada akhirnya dapat memberikan pengaruh dalam pengambilan keputusan dan membawa perubahan pada perusahaan untuk melakukan investasi terhadap peningkatan produktivitas (Najaf & Najaf, 2021). Dalam studi Saeed et al, (2016), Osazuwa, (2016 dan Chancharat et al, (2019) mengutarakan bahwa hubungan politik mempunyai korelasi negatif atas kinerja perusahaan. Namun dalam penelitian Huimin et al, (2014) menemukan bahwa hubungan politik tidak memiliki hubungan yang signifikan terhadap kinerja keuangan perusahaan.…”