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The impact of political connections on firm performance in an emerging market: evidence from legal regulations in Vietnam

Author

Listed:
  • Nguyen Thi Hoa Hong

    (Foreign Trade University)

  • Pham Tuan Kien

    (Foreign Trade University)

  • Hoang Khanh Linh

    (Foreign Trade University)

  • Mai Thi Trang Linh

    (Foreign Trade University)

Abstract

This study examines the impact of political connections on the firm performance of Vietnamese listed companies in the context of changing legal regulations in two periods: before and after the 2014 Enterprise Law officially takes effect during 2010-2022. Political connections are measured through the relationship of the Board of Directors with state organizations and the background of Vietnamese politicians. Using Pooled Ordinary Least Square regression, the results show a positive relationship between political factors and firm performance in the period 2010-2014, when civil servants are still directly involved in enterprise management. By the period 2015-2022, the influence of political connections on business activities is no longer meaningful. Therefore, the findings could provide implications for stakeholders to enhance the operations of the respective businesses.

Suggested Citation

  • Nguyen Thi Hoa Hong & Pham Tuan Kien & Hoang Khanh Linh & Mai Thi Trang Linh, 2023. "The impact of political connections on firm performance in an emerging market: evidence from legal regulations in Vietnam," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 26(1), pages 54-66, December.
    • Handle: RePEc:rse:wpaper:v:26:y:2023:i:2:p:54-66
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    More about this item

    Keywords

    Board of Directors; firm performance; legal regulations; political connections; politicians;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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