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Political Connectedness and Financial Performance of SMEs

Author

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  • Gaygysyz Ashyrov

    (Research, Development and Innovation Unit, Estonian Business School, 10114 Tallinn, Estonia)

  • Oliver Lukason

    (School of Economics and Business Administration, University of Tartu, 51009 Tartu, Estonia)

Abstract

The extant literature on the association of political connectedness and performance of large firms has led to controversial results, while the context of micro-, small- and medium-sized enterprises (SMEs) has largely been overlooked in relevant studies. To resolve these gaps, the objective of this paper is to study the link between the political connections of firm board members and financial performance in the Estonian SME population. Using a wide selection of financial performance and political connectedness variables, the composed regressions indicated that firms with politically connected boards underperform their unconnected counterparts. The findings remained robust not only through different measures of dependent and independent variables, but also periods studied.

Suggested Citation

  • Gaygysyz Ashyrov & Oliver Lukason, 2022. "Political Connectedness and Financial Performance of SMEs," JRFM, MDPI, vol. 15(12), pages 1-17, December.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:12:p:600-:d:1001740
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    References listed on IDEAS

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