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Do different political connections affect financial reporting quality differently? Evidence from Malaysia

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  • Khanh Hoang
  • Thanh Tat Tran
  • Hien Thi Thu Tran
  • Anh Quoc Le

Abstract

This paper investigates the impacts of four distinct types of political connection on financial reporting quality (FRQ) using a unique sample of Malaysian listed firms during 2002–2016. Using a battery of regression techniques, we show that political connections associate with lower FRQ only in firms connected to the government through government‐linked investments and politically connected directors. However, the impact is absent in firms connected via personal relationships such as family members of the leading politicians and crony capitalists. We suggest that corporate FRQ varies across different categories of political connection and support the resource dependence theory.

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  • Khanh Hoang & Thanh Tat Tran & Hien Thi Thu Tran & Anh Quoc Le, 2022. "Do different political connections affect financial reporting quality differently? Evidence from Malaysia," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(2), pages 289-300, March.
    • Handle: RePEc:wly:mgtdec:v:43:y:2022:i:2:p:289-300
    DOI: 10.1002/mde.3395
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    2. Yueyang Zhao & Jinzhou Mao, 2023. "Mixed ownership reforms and the transparency of nonstate‐owned enterprises: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 271-284, January.

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