Benefits and costs of political connections: evidence from Tunisia

Naima Lassoued and Mouna Ben Rejeb Attia

International Journal of Accounting, Auditing and Performance Evaluation, 2014, vol. 10, issue 3, 299-325

Abstract: The purpose of this paper is to investigate whether political connections in Tunisia give firms advantages such us easy access to external financing and tax benefits and/or force them to spend more on employment. In addition, we show if political connections affect accounting and market performance. Using a sample of listed Tunisian firms between 2006 and 2010, we apply OLS regression to identify the effect of political connections on firms' policies and performance. We find that politically connected firms gain easier access to credit with relatively high costs compared to unconnected counterparts. They are offered more government subsidies and they enjoy better tax benefits thanks to their ties with politicians. Additionally, politically connected firms outperform their unconnected counterparts and they have higher value. Hence, political relationships seem to help firms getting access to key resources which improve their accounting and market performance without contributing to the job creation process. Our results are more robust for non-financial firms.

Keywords: political connections; performance; indebtedness; taxation; Tunisia; external financing; tax benefits; accounting; market performance; government subsidies; job creation. (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.inderscience.com/link.php?id=64235 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijaape:v:10:y:2014:i:3:p:299-325

Access Statistics for this article

More articles in International Journal of Accounting, Auditing and Performance Evaluation from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().