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The effect of political connections on corporate investment and investment efficiency

Document Type : Research Paper

Authors

1 Associate Professor of Accounting Department, Allameh Tabataba’i University, Tehran, Iran.

2 Senior Accounting Expert, Allameh Tabataba'i University, Tehran, Iran.

3 Ph.D student, Research Sciences University Islamic Azad University, Tehran, Iran

Abstract

This research has been conducted with the aim of experimental test of the effect of political relations on the amount of investment of companies and its efficiency in the period of 2012 to 2019 of companies listed in the Tehran Stock Exchange. The method of data collection is archival and reference to databases and the method of data analysis is multivariate regression model using panel data model and fixed effects method. The results show that the relationship between political relations and the amount of investment as well as investment efficiency is positive and significant. These results indicate that companies with political connections have more investment than other companies and investment efficiency is higher in companies with political connections. According to the research findings, it can be seen that companies with political connections invest more and more efficiently than other companies due to their government benefits and privileges, as well as the ease of attracting financial resources.

Keywords

Main Subjects

References
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Empirical Studies in Financial Accounting
Volume 19, Issue 75
October 2022
Pages 69-94
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History
  • Receive Date: 16 October 2021
  • Revise Date: 22 January 2022
  • Accept Date: 11 April 2022
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