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Partisan political connections, ethnic tribalism, and firm performance

Author

Listed:
  • Vincent Tawiah

    (Dublin City University)

  • Abdulrasheed Zakari

    (Beijing Institute of Technology)

  • Yan Wang

    (Nottingham Trent University)

Abstract

This paper investigates the impact of partisan political connections and ethnic tribalism on firm performance in a hyper-partisan political environment. Although existing literature generally shows that political connections improve firm performance, we argue that under the theory of electoral competition, political connections can be a double-edged sword because of the tension of partisan politics. Hence, we expect that changes in government can affect firm performance. Using a unique dataset from Nigeria, we find that political connections are valuable when a firm's patron party is in power, whereas they are detrimental to firm value when their patron party is in opposition. Furthermore, we find that CEO ethnic tribal affiliation with the President improves firm performance even when the firm's patron party is in opposition. This paper extends the literature on political connections and helps managers and policymakers understand the timely use of political connections in a hyper-partisan environment.

Suggested Citation

  • Vincent Tawiah & Abdulrasheed Zakari & Yan Wang, 2022. "Partisan political connections, ethnic tribalism, and firm performance," Review of Quantitative Finance and Accounting, Springer, vol. 58(4), pages 1331-1362, May.
    • Handle: RePEc:kap:rqfnac:v:58:y:2022:i:4:d:10.1007_s11156-021-01026-8
    DOI: 10.1007/s11156-021-01026-8
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    More about this item

    Keywords

    Partisan politics; Political connections; Tribalism; Firm performance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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