Sanctions against Iran, political connections and speed of adjustment

Abbas Aflatooni, Kaveh Ghaderi and Kefsan Mansouri

Emerging Markets Review, 2022, vol. 51, issue PB

Abstract: This study examines the effect of intensifying economic sanctions against Iran on speed of adjustment (SOA) in firms listed on Tehran Stock Exchange during 2001–2018. We find evidence that firms adjust their leverage toward the target at a lower speed in high-intensity sanctions than low-intensity sanctions. Moreover, we indicate that the negative impact of the intensification of sanctions on SOA is stronger for politically connected firms than other firms. Our results are robust to an alternative set of leverage determinants, two alternative definitions for sanctions intensity, an alternative measure for political connections, and an alternative two-step process for hypotheses testing.

Keywords: Economic sanctions; Political connections; Speed of adjustment; Tehran Stock Exchange (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:51:y:2022:i:pb:s1566014122000061

DOI: 10.1016/j.ememar.2022.100889

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