Political connection types and investors’ perceived risk : evidence from Malaysia
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...
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| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2019
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| Online Access: | http://journalarticle.ukm.my/19182/1/35874-118969-1-PB.pdf http://journalarticle.ukm.my/19182/ https://ejournal.ukm.my/ajac/issue/view/1225 |
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| Institution: | Universiti Kebangsaan Malaysia |
| Language: | English |
| Summary: | 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. |
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