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The objective of the study is to discuss the effects of political influence on investors’ perceiv... more The objective of the study is to discuss the effects of political influence on investors’ perceived risk under the political connected firms. Under the Malaysian political environment, relationship based of economic system which commonly practiced by most of the listed firms would enhance the needs of politician to participate as directors of the firm in order to ensure the firm’s survival in competitive industry. The effects of systematic exchange of favours between politician and firms has led to the arguments of political hypotheses in governance literature. As supported under the helping hand effects, empirical evidences have shown a favourable impact on firms accounting value and market based-performance due to the government favours and bailed-out to connected firms. However, the government obligations towards the people in social and political agenda have exacerbated the rent-seeking activities of political directors in realising the objectives. Moreover, due to the increasin...
International Journal of Management Studies, 2020
This study examines the effect of political connections (PCONS) on firms’ disclosure of forward-l... more This study examines the effect of political connections (PCONS) on firms’ disclosure of forward-looking information choices in the context of developing countries. Using multivariate regression of panel data comprising 360 firmyear observations of non-financial firms listed on Bursa Malaysia between years 2014 and 2017, PCONS are found to be positively associated with disclosure of forward-looking information. However, such relationship only exists for non-financial forward-looking information. Using the stakeholder salience theory to further contribute to the body of knowledge, the strength of the connections suggests that a high composition of politically-connected directors on the board promotes greater information about the future in firms’ disclosure. The common connection through ownership of firms in emerging countries suggests the effective role of institutional shareholders in improving forecasting activities through high disclosure of forward-looking information. The study...
Asian Journal of Accounting and Governance, 2019
This study examines the pervasive political influence in Malaysian businesses, specifically the i... more This study examines the pervasive political influence in Malaysian businesses, specifically the investors' perceived risk of political connection. A sample of 312 firm-year observations between 2014 to 2017 reveals that politically connected Malaysian firms are less likely to be perceived as risky compared with their non-connected peers. In particular, reduction of systematic risk in cost of equity as a proxy to perceived risk is more significant for firms connected through directorship because political figures effectively channel substantial benefits in connecting firms under his/her political power. The link between types of political connections and investors' perceived risk provides a new insight and direction for research about governance factors that affect firm risks.
The objective of the study is to discuss the effects of political influence on investors’ perceiv... more The objective of the study is to discuss the effects of political influence on investors’ perceived risk under the political connected firms. Under the Malaysian political environment, relationship based of economic system which commonly practiced by most of the listed firms would enhance the needs of politician to participate as directors of the firm in order to ensure the firm’s survival in competitive industry. The effects of systematic exchange of favours between politician and firms has led to the arguments of political hypotheses in governance literature. As supported under the helping hand effects, empirical evidences have shown a favourable impact on firms accounting value and market based-performance due to the government favours and bailed-out to connected firms. However, the government obligations towards the people in social and political agenda have exacerbated the rent-seeking activities of political directors in realising the objectives. Moreover, due to the increasin...
International Journal of Management Studies, 2020
This study examines the effect of political connections (PCONS) on firms’ disclosure of forward-l... more This study examines the effect of political connections (PCONS) on firms’ disclosure of forward-looking information choices in the context of developing countries. Using multivariate regression of panel data comprising 360 firmyear observations of non-financial firms listed on Bursa Malaysia between years 2014 and 2017, PCONS are found to be positively associated with disclosure of forward-looking information. However, such relationship only exists for non-financial forward-looking information. Using the stakeholder salience theory to further contribute to the body of knowledge, the strength of the connections suggests that a high composition of politically-connected directors on the board promotes greater information about the future in firms’ disclosure. The common connection through ownership of firms in emerging countries suggests the effective role of institutional shareholders in improving forecasting activities through high disclosure of forward-looking information. The study...
Asian Journal of Accounting and Governance, 2019
This study examines the pervasive political influence in Malaysian businesses, specifically the i... more This study examines the pervasive political influence in Malaysian businesses, specifically the investors' perceived risk of political connection. A sample of 312 firm-year observations between 2014 to 2017 reveals that politically connected Malaysian firms are less likely to be perceived as risky compared with their non-connected peers. In particular, reduction of systematic risk in cost of equity as a proxy to perceived risk is more significant for firms connected through directorship because political figures effectively channel substantial benefits in connecting firms under his/her political power. The link between types of political connections and investors' perceived risk provides a new insight and direction for research about governance factors that affect firm risks.