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The impact of political connections on the quality of corporate governance

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  • Saidatou Dicko

Abstract

This study examines whether the quality of governance of politically connected firms is different from the quality of governance of firms that have no political connections. Based on S%P/TSX firms from 2010 to 2014, and using the Institutional Shareholder Services Governance Index, our study shows that politically connected firms have higher risk levels associated with the overall governance index than non-connected firms. More specifically, the risk in politically connected firms is greater with respect to shareholders' rights and structure of compensation indexes. However, no significant difference between politically connected and non-connected firms was noted in terms of governance risk related to board structure or audit and risk oversight indexes. The risk associated with structure of compensation and shareholders' rights is higher than that associated with other aspects of governance (board structure, audit and risk oversight).

Suggested Citation

  • Saidatou Dicko, 2016. "The impact of political connections on the quality of corporate governance," International Journal of Corporate Governance, Inderscience Enterprises Ltd, vol. 7(3), pages 247-273.
    • Handle: RePEc:ids:ijcgov:v:7:y:2016:i:3:p:247-273
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    Citations

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    Cited by:

    1. narjess BOUABDALLAH & jamel Eddine HENCHIRI, 2020. "L' impact des mécanismes de gouvernance interne sur le risque opérationnel bancaire," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 11(1), pages 151-189, June.
    2. Saidatou Dicko & Hanen Khemakhem & Félix Zogning, 2020. "Political connections and voluntary disclosure: the case of Canadian listed companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(2), pages 481-506, June.
    3. Yi, Shangkun & Wang, Jian & Wang, Xiaoting & Feng, Hongrui, 2022. "CEO political connection and stock sentiment beta: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    4. Vagner Alves Arantes & Saidatou Dicko & Rodrigo Oliveira Soares, 2024. "Firms’ political connections and performance in Brazil and Canada: an analysis of the effect of country institutional factors," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 28(1), pages 63-112, March.

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