Cost of debt of political connection firms in Malaysia

This paper investigated on three types of Politically Connected Firms (PCON firms) namely, board of directors (PCON_BOARD); Government-Linked Companies (PCON_GLC); businessmen and family members of government leaders (PCON_FAM_BUSS) to seek their association with the cost of debt. This study was mat...

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Main Author:	Nur Afiqah, Redzuan
Format:	Thesis
Language:	eng eng
Published:	2020
Subjects:	HG Finance HJ Public Finance
Online Access:	https://etd.uum.edu.my/10361/1/grant%20the%20permission_s820650.pdf https://etd.uum.edu.my/10361/2/s820650_01.pdf
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id	my-uum-etd.10361
record_format	uketd_dc
spelling	my-uum-etd.103612023-03-01T08:39:38Z Cost of debt of political connection firms in Malaysia 2020 Nur Afiqah, Redzuan School of Economics, Finance & Banking School of Economics, Finance & Banking HG Finance HJ Public Finance This paper investigated on three types of Politically Connected Firms (PCON firms) namely, board of directors (PCON_BOARD); Government-Linked Companies (PCON_GLC); businessmen and family members of government leaders (PCON_FAM_BUSS) to seek their association with the cost of debt. This study was materialized by employing a data set comprising PCON firms in Malaysia for the period 2003 to 2018. A total of 107 PCON firms that are listed on the Main Market of Bursa Malaysia was engaged in this study. This study employed the multivariate analysis and linear regression model to produce the results. The findings revealed that only PCON_BOARD and PCON_FAM_BUSS had negative association with the cost of debt. Specifically, the findings informed that leverage and firm size were associated with a lower cost of debt, whereas sales growth and return on assets (ROA) had no impact on the cost of debt. Despite this, PCON_GLC exhibited no association with the cost of debt. This finding was inconsistent with past studies that found otherwise, that is, GLCs’ association with a lower cost of debt. This study has enriched the existing literature concerning the relationship between PCON firms and the cost of debt. Moreover, this study has provided analysis that uncovered the status of the respective PCON firm group in relation to the cost of debt when financing asset or investment activities, and the influence of political connection in that respect. Overall, this study has provided information to lenders particularly the banks to help them make credit decisions based on the applicant firm level of risk and leverage. This study also highlighted to regulators on good corporate governance, as outlined by The Malaysian Code on Corporate Governance (MCCG) to ensure that policies and regulations are designed accordingly. This is important for improvement or enhancement of firm corporate governance and transparency. 2020 Thesis https://etd.uum.edu.my/10361/ https://etd.uum.edu.my/10361/1/grant%20the%20permission_s820650.pdf text eng staffonly https://etd.uum.edu.my/10361/2/s820650_01.pdf text eng public other masters Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
topic	HG Finance HJ Public Finance
spellingShingle	HG Finance HJ Public Finance Nur Afiqah, Redzuan Cost of debt of political connection firms in Malaysia
description	This paper investigated on three types of Politically Connected Firms (PCON firms) namely, board of directors (PCON_BOARD); Government-Linked Companies (PCON_GLC); businessmen and family members of government leaders (PCON_FAM_BUSS) to seek their association with the cost of debt. This study was materialized by employing a data set comprising PCON firms in Malaysia for the period 2003 to 2018. A total of 107 PCON firms that are listed on the Main Market of Bursa Malaysia was engaged in this study. This study employed the multivariate analysis and linear regression model to produce the results. The findings revealed that only PCON_BOARD and PCON_FAM_BUSS had negative association with the cost of debt. Specifically, the findings informed that leverage and firm size were associated with a lower cost of debt, whereas sales growth and return on assets (ROA) had no impact on the cost of debt. Despite this, PCON_GLC exhibited no association with the cost of debt. This finding was inconsistent with past studies that found otherwise, that is, GLCs’ association with a lower cost of debt. This study has enriched the existing literature concerning the relationship between PCON firms and the cost of debt. Moreover, this study has provided analysis that uncovered the status of the respective PCON firm group in relation to the cost of debt when financing asset or investment activities, and the influence of political connection in that respect. Overall, this study has provided information to lenders particularly the banks to help them make credit decisions based on the applicant firm level of risk and leverage. This study also highlighted to regulators on good corporate governance, as outlined by The Malaysian Code on Corporate Governance (MCCG) to ensure that policies and regulations are designed accordingly. This is important for improvement or enhancement of firm corporate governance and transparency.
format	Thesis
qualification_name	other
qualification_level	Master's degree
author	Nur Afiqah, Redzuan
author_facet	Nur Afiqah, Redzuan
author_sort	Nur Afiqah, Redzuan
title	Cost of debt of political connection firms in Malaysia
title_short	Cost of debt of political connection firms in Malaysia
title_full	Cost of debt of political connection firms in Malaysia
title_fullStr	Cost of debt of political connection firms in Malaysia
title_full_unstemmed	Cost of debt of political connection firms in Malaysia
title_sort	cost of debt of political connection firms in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	School of Economics, Finance & Banking
publishDate	2020
url	https://etd.uum.edu.my/10361/1/grant%20the%20permission_s820650.pdf https://etd.uum.edu.my/10361/2/s820650_01.pdf
_version_	1776103799816978432

Cost of debt of political connection firms in Malaysia

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