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Are political connections beneficial or harmful toward firms’ performance? A meta-analysis approach

Khusnul Prasetyo (Department of Accountancy, Faculty of Economics and Business, Airlangga University, Surabaya, Indonesia)
Damai Nasution (Department of Accountancy, Faculty of Economics and Business, Airlangga University, Surabaya, Indonesia)

Corporate Governance

ISSN: 1472-0701

Article publication date: 1 December 2021

Issue publication date: 14 June 2022

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Abstract

Purpose

This study aims to reconcile conflicting empirical results from prior studies on the association between political connections (PCs) and firms’ performance. Furthermore, it investigates whether the contradictory findings were moderated by the different types of both PCs and firms’ performance measures. This study also makes a cross-country comparison of the empirical evidence to provide more insight.

Design/methodology/approach

This study used meta-analysis to integrate the previous studies’ findings on the association between PCs and firms’ performance and further investigated the moderators of such association.

Findings

The findings show that PCs have a positive association with firms’ performance. This result is apparent for both democratic and authoritarian countries, which suggests PCs’ beneficial consequences toward firms’ performance should not be disregarded in both contexts. This study also finds PCs and firms’ performance measures moderate the association between PCs and firms’ performance.

Originality/value

This study contributes to the stream of research that investigates the association between PCs and firms’ performance. To the best of our knowledge, it is among the first to implement statistical meta-analysis on the aforementioned literature while incorporating a cross-country comparison.

Keywords

Acknowledgements

The authors appreciate the valuable comments from Gabriel Eweje (editor-in-chief), Masahiro Hosoda (associate editor), and two anonymous reviewers.

Citation

Prasetyo, K. and Nasution, D. (2022), "Are political connections beneficial or harmful toward firms’ performance? A meta-analysis approach", Corporate Governance, Vol. 22 No. 5, pp. 901-921. https://doi.org/10.1108/CG-07-2021-0256

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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