The impact of political connection and board diversity on company performance: Evidence from China

Liang, Lien‐Wen; Lin, Tsui Jung; Yu, Hui-Fun; Li, Ya‐Wen

doi:10.1002/mde.3529

Cited by 7 publications

(5 citation statements)

References 71 publications

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“…The control variables encompass firm age (in years), size (the natural logarithm of firm's total assets), firm location (1 for the capital city of Tallinn, 0 for other), mean of the biological age of individuals on the board (in years), women on the board (1 for at least one woman on the board), and mean of the time spent on the board (in years). These controls have been frequently used in the empirical studies on the relationship between political connectedness and firm performance, with recent examples of board member age in Liang et al (2022) and Xia et al (2019), board member gender and firm region in Wu et al (2018), board tenure in Kuzman et al (2018), and firm age and size in He et al (2019) and Liu et al (2021). We also included industry dummy variables to control for industry fixed effects (referred to as "Industry FE").…”

Section: Methodsmentioning

confidence: 99%

Political Connectedness and Financial Performance of SMEs

Ashyrov

Lukason

2022

JRFM

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The extant literature on the association of political connectedness and performance of large firms has led to controversial results, while the context of micro-, small- and medium-sized enterprises (SMEs) has largely been overlooked in relevant studies. To resolve these gaps, the objective of this paper is to study the link between the political connections of firm board members and financial performance in the Estonian SME population. Using a wide selection of financial performance and political connectedness variables, the composed regressions indicated that firms with politically connected boards underperform their unconnected counterparts. The findings remained robust not only through different measures of dependent and independent variables, but also periods studied.

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Section: Methodsmentioning

confidence: 99%

Political Connectedness and Financial Performance of SMEs

Ashyrov

Lukason

2022

JRFM

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“…Furthermore, Kim et al (2013) studied the effect of boards with diverse political ideologies on firm performance. They concluded that boards with political diversity are linked with higher firm performance (Liang et al, 2021). While the literature in this field is scarce, it might apply in Mauritius.…”

Section: Political Connections Board Ethnicity and Value Relevancementioning

confidence: 99%

“…(2013) studied the effect of boards with diverse political ideologies on firm performance. They concluded that boards with political diversity are linked with higher firm performance (Liang et al. , 2021).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Political connections, board ethnicity and value relevance in Mauritius

Mustun,

Abdul Wahab

2023

ARA

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PurposeThe paper aims to investigate the impact of political connections and board ethnicity on the value relevance of earnings and book value in Mauritius.Design/methodology/approachThis study is based on a sample of 541 Mauritian-listed firm-year observations for 2001–2016. Financial and board diversity data have been collected using the listed firms’ annual reports and from reports published by the Stock Exchange of Mauritius. Political connection data was derived from the directory of Chief of State and Cabinet members. The research hypotheses were empirically tested using a modified Ohlson (1995) price model.FindingsThis study shows that political connections negatively impact the value relevance of earnings and book value. The authors find that firms with Franco-Mauritian directors will constrain political connections’ negative impact. The authors find contrasting results for Indo-Mauritian directors since they form an integral part of the government in Mauritius.Originality/valueThis study contributes to the scarce accounting literature in Mauritius. Firstly, no study has investigated the relationship between the value relevance of accounting information and political connections in Mauritius. Secondly, Mauritius’s capital market is dominated by a non-indigenous ethnic group, Franco-Mauritians, who remain the economic elite. Hence, Mauritius presents an opportunity to bring forth another important aspect in the capital market and corporate governance; diversity on the board of directors. Therefore, the study extends to the political connections and board diversity literature.

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“…Empirical evidence of board diversity generates various results. For example, heterogenous board has long-term impact on company goals (Naciti, 2019); diversity adversely influences company performance (Liang, Lin, Yu, and Li, 2021); and diversity is insignificant for large company to innovate (Zona et al, 2013). However, most results agree that diversity plays an important role in establishing board functions.…”

Section: Introductionmentioning

confidence: 99%

Can ESG Policy Become the Sustainability Catalyst of Company Performance During Covid-19 Pandemic?

Hendriyeni¹,

Pinasthika²,

Akbar³

2023

j.manage.bus.rev.

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This study is conducted to discover the influence of environmental, social, and governance (ESG) policy on company performance during the Covid-19 pandemic. Both the company principal and agent are expected to consider the impact of developing a policy during the pandemic, especially concerning ESG policy. The ESG disclosure study aims to verify whether the policy, which is proxied with standard Global Reporting Initiative (GRI) disclosure in the sustainability report, influences company performance, which is proxied with Tobinâ€™s Q ratio as a measure to discover the market response. It is founded on the urgency that the pandemic alters investorsâ€™ views about the company. This research failed to verify H1 or the influence of ESG disclosure on company performance. On the other hand, H2 and H3, including control variables, significantly influence company performance, as well as the Independence of the board of directors (BoD) and board of commissioners (BoC), which also have a significant but negative influence. This study has practical implications in which disclosure of ESG policy does not significantly influence company performance due to the management mindset, which still focuses on short-term conditions. It is thus necessary to develop a long-term strategic plan while taking sustainability into account.

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The impact of political connection and board diversity on company performance: Evidence from China

Cited by 7 publications

References 71 publications

Political Connectedness and Financial Performance of SMEs

Political Connectedness and Financial Performance of SMEs

Political connections, board ethnicity and value relevance in Mauritius

Can ESG Policy Become the Sustainability Catalyst of Company Performance During Covid-19 Pandemic?

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