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Political connections and operational performance of non-financial firms: New evidence from Poland

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  • Jackowicz, Krzysztof
  • Kozłowski, Łukasz
  • Mielcarz, Paweł

Abstract

This study analyses the impact of political connections on the operational performance of non-financial firms in Poland. Using a data set covering the 2001–2011 period, we find that political connections lower firm profitability, as measured on the level of income from sales. The negative impact is the strongest when a firm possesses multiple connections, has politically connected members on its supervisory board, or employs ex-politicians with central government experience. Therefore, our findings do not support claims based on resource dependence theory. The Polish market's specificity is most likely related to the instability of the political scene.

Suggested Citation

  • Jackowicz, Krzysztof & Kozłowski, Łukasz & Mielcarz, Paweł, 2014. "Political connections and operational performance of non-financial firms: New evidence from Poland," Emerging Markets Review, Elsevier, vol. 20(C), pages 109-135.
    • Handle: RePEc:eee:ememar:v:20:y:2014:i:c:p:109-135
    DOI: 10.1016/j.ememar.2014.06.005
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    Cited by:

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    4. Wang, Delu & Ma, Gang & Song, Xuefeng & Liu, Yun, 2016. "Political connection and business transformation in family firms: Evidence from China," Journal of Family Business Strategy, Elsevier, vol. 7(2), pages 117-130.
    5. John Rand, 2017. "Are politically connected firms less constrained in credit markets?," WIDER Working Paper Series wp-2017-200, World Institute for Development Economic Research (UNU-WIDER).
    6. Tee, Chwee Ming, 2018. "Political connections and the cost of debt: Re-examining the evidence from Malaysia," Journal of Multinational Financial Management, Elsevier, vol. 46(C), pages 51-62.
    7. Feifei Yu & Yue Guo & Fiona Lettic & Stuart J Barnes, 2019. "Regional Anti‐Corruption Effort, Political Connections And Firm Innovation Effort: Evidence From China," Bulletin of Economic Research, Wiley Blackwell, vol. 71(1), pages 18-32, January.
    8. Kravchenko Grygorii, 2021. "International Experts’ Influence on Company Internationalization," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 29(4), pages 57-90, December.
    9. Wong, Wai-Yan & Hooy, Chee-Wooi, 2018. "Do types of political connection affect firm performance differently?," Pacific-Basin Finance Journal, Elsevier, vol. 51(C), pages 297-317.
    10. Thanakorn Suriyapongprapai & Pattanaporn Chatjuthamard & Arnat Leemakdej & Sirimon Treepongkaruna, 2022. "Stakeholder engagement, military ties, and firm performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(2), pages 469-479, March.
    11. Hongfeng Peng & Xiao Zhang & Xiaoquan Zhu, 2017. "Political connections of the board of directors and credit financing: evidence from Chinese private enterprises," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(5), pages 1481-1516, December.
    12. Katarzyna Szarzec, 2023. "Przedsiębiorstwa państwowe we współczesnej gospodarce – cele i uwarunkowania efektywności działania," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 3, pages 295-314.
    13. Dang, Vinh Q.T. & So, Erin P.K., 2018. "Having the wrong friends at the wrong time: Effects of political turmoil on politically-connected firms," Emerging Markets Review, Elsevier, vol. 36(C), pages 79-94.
    14. Sabeeh Ullah & Yasir Kamal, 2017. "Board Characteristics, Political Connections, and Corporate Cash Holdings: The Role of Firm Size and Political Regime," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 9(1), pages 157-179, March.
    15. Phan, Dinh Hoang Bach & Tee, Chwee Ming & Tran, Vuong Thao, 2020. "Do different types of political connections affect corporate investments? Evidence from Malaysia," Emerging Markets Review, Elsevier, vol. 42(C).
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    More about this item

    Keywords

    Political connections; Operational performance; Listed firms; Emerging economies;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H80 - Public Economics - - Miscellaneous Issues - - - General

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