Political connections and financial performance: The moderating effect of corporate governance efficacy in Pakistan

Firm performance has become a thriving research field. However, a review of previous studies showed that the answers to several fundamental questions remain vague and require further investigation. Thus, the purpose of this study is twofold; first, to examine the relationship between political conne...

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Main Author:	Niazi, Murtaza Masud
Format:	Thesis
Language:	eng eng
Published:	2022
Subjects:	HD2709-2930.7 Corporations HG Finance JA Political science (General)
Online Access:	https://etd.uum.edu.my/10940/1/permission%20to%20deposit-allow-s902491.pdf https://etd.uum.edu.my/10940/2/s902491_01.pdf
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id	my-uum-etd.10940
record_format	uketd_dc
spelling	my-uum-etd.109402024-01-31T07:48:31Z Political connections and financial performance: The moderating effect of corporate governance efficacy in Pakistan 2022 Niazi, Murtaza Masud Othman, Zaleha Chandren, Sitraselvi Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HD2709-2930.7 Corporations HG Finance JA Political science (General) Firm performance has become a thriving research field. However, a review of previous studies showed that the answers to several fundamental questions remain vague and require further investigation. Thus, the purpose of this study is twofold; first, to examine the relationship between political connection and company financial performance representing return on assets, return on equity, and Tobin's Q in Pakistani non-financial listed companies. Second, to examine the association between political connection and financial performance with moderating role of director efficacy and audit committee efficacy. This study used the data of 221 companies listed on the Pakistan Stock Exchange over the period 2008-2017. Based on the Panel Regression with Corrected Standard Error, the result showed that political connection has a significant negative effect on company financial performance. With the interaction effect of the director's efficacy further strengthens the relationship between political connection and return on assets. However, the director efficacy weakens the relationship of political connection with return on equity and Tobin’s Q. In addition, the interaction effect of audit committee efficacy weakens the relationship between political connection and firm performance. Thus, the impact of political influence on the corporate sector remains a concern for policymakers, regulators, investors, financial experts, auditors, and academic researchers. Further, an effective board of directors and audit committee can strengthen a company's best practices by controlling political connectedness to protect all the stakeholders’ interests, particularly investors, and restore their confidence. Overall, the findings assist stakeholders to make the right decision when a political connection exists. Finally, this study extends the political connection and corporate governance including financial performance literature by linking the political economy theory in emerging economies like Pakistan. 2022 Thesis https://etd.uum.edu.my/10940/ https://etd.uum.edu.my/10940/1/permission%20to%20deposit-allow-s902491.pdf text eng staffonly https://etd.uum.edu.my/10940/2/s902491_01.pdf text eng public other doctoral Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Othman, Zaleha Chandren, Sitraselvi
topic	HD2709-2930.7 Corporations HG Finance JA Political science (General)
spellingShingle	HD2709-2930.7 Corporations HG Finance JA Political science (General) Niazi, Murtaza Masud Political connections and financial performance: The moderating effect of corporate governance efficacy in Pakistan
description	Firm performance has become a thriving research field. However, a review of previous studies showed that the answers to several fundamental questions remain vague and require further investigation. Thus, the purpose of this study is twofold; first, to examine the relationship between political connection and company financial performance representing return on assets, return on equity, and Tobin's Q in Pakistani non-financial listed companies. Second, to examine the association between political connection and financial performance with moderating role of director efficacy and audit committee efficacy. This study used the data of 221 companies listed on the Pakistan Stock Exchange over the period 2008-2017. Based on the Panel Regression with Corrected Standard Error, the result showed that political connection has a significant negative effect on company financial performance. With the interaction effect of the director's efficacy further strengthens the relationship between political connection and return on assets. However, the director efficacy weakens the relationship of political connection with return on equity and Tobin’s Q. In addition, the interaction effect of audit committee efficacy weakens the relationship between political connection and firm performance. Thus, the impact of political influence on the corporate sector remains a concern for policymakers, regulators, investors, financial experts, auditors, and academic researchers. Further, an effective board of directors and audit committee can strengthen a company's best practices by controlling political connectedness to protect all the stakeholders’ interests, particularly investors, and restore their confidence. Overall, the findings assist stakeholders to make the right decision when a political connection exists. Finally, this study extends the political connection and corporate governance including financial performance literature by linking the political economy theory in emerging economies like Pakistan.
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Niazi, Murtaza Masud
author_facet	Niazi, Murtaza Masud
author_sort	Niazi, Murtaza Masud
title	Political connections and financial performance: The moderating effect of corporate governance efficacy in Pakistan
title_short	Political connections and financial performance: The moderating effect of corporate governance efficacy in Pakistan
title_full	Political connections and financial performance: The moderating effect of corporate governance efficacy in Pakistan
title_fullStr	Political connections and financial performance: The moderating effect of corporate governance efficacy in Pakistan
title_full_unstemmed	Political connections and financial performance: The moderating effect of corporate governance efficacy in Pakistan
title_sort	political connections and financial performance: the moderating effect of corporate governance efficacy in pakistan
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2022
url	https://etd.uum.edu.my/10940/1/permission%20to%20deposit-allow-s902491.pdf https://etd.uum.edu.my/10940/2/s902491_01.pdf
_version_	1794023793503502336

Political connections and financial performance: The moderating effect of corporate governance efficacy in Pakistan

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