IDEAS home Printed from https://ideas.repec.org/a/eme/arapps/ara-05-2020-0064.html
   My bibliography  Save this article

The effect of political connections on firm performance: evidence from Egypt

Author

Listed:
  • Aref M. Eissa
  • Yasser Eliwa

Abstract

Purpose - This paper examines the effect of political connections (PCs) on firms' profitability and market value in the Egyptian market after the uprising of 2013. Design/methodology/approach - An empirical study is conducted based on 284 firm-year observations for non-financial listed firms on the EGX100 during the period of 2014–2017. To test the study’s hypothesis, two independent samplet-test, Pearson correlation analysis and ordinary least square (OLS) regressions are conducted. Findings - The results suggest that PCs are common across all industries in Egypt, the PCs through top officers do not improve firm's profitability; however, it has a positive effect on firms' market value. Further, PCs through business owners improve neither profitability nor the market value. Finally, the results suggest that PCs through government ownership have a positive effect on both firms' profitability and market value. Practical implications - The study’s finding encourages policymakers and regulators in emerging markets, e.g. Egypt, to develop stricter laws, policies and regulatory initiatives to restrain the potential conflict of interest in the politically connected firms. Originality/value - To the best of the authors' knowledge, this study is one of the first to examine the relationship between PCs and both firms’ profitability and market value in Egypt.

Suggested Citation

  • Aref M. Eissa & Yasser Eliwa, 2021. "The effect of political connections on firm performance: evidence from Egypt," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 29(3), pages 362-382, July.
    • Handle: RePEc:eme:arapps:ara-05-2020-0064
    DOI: 10.1108/ARA-05-2020-0064
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/ARA-05-2020-0064/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/ARA-05-2020-0064/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/ARA-05-2020-0064?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ahmed Diab & Aref M. Eissa, 2023. "ESG Performance, Auditor Choice, and Audit Opinion: Evidence from an Emerging Market," Sustainability, MDPI, vol. 16(1), pages 1-18, December.
    2. Aref M. Eissa & Arafat Hamdy & Ahmed Diab, 2024. "Governmental Ownership, Board Gender Diversity, and ESG Performance: Evidence from an Emerging Market," Sustainability, MDPI, vol. 16(16), pages 1-17, August.
    3. Aboushady, Nora & Zaki, Chahir, 2023. "Are global value chains for sale? On business-state relations in the MENA region," IDOS Discussion Papers 17/2023, German Institute of Development and Sustainability (IDOS).
    4. Tasawar Nawaz & Roszaini Haniffa & Mohammad Hudaib, 2023. "From boots to suits: do military directors protect shareholders’ wealth?," Review of Quantitative Finance and Accounting, Springer, vol. 61(4), pages 1479-1511, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:arapps:ara-05-2020-0064. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.