The impact of political connections on firm performance in an emerging market: evidence from legal regulations in Vietnam

Nguyen Thi Hoa Hong, Pham Tuan Kien, Hoang Khanh Linh and Mai Thi Trang Linh
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Nguyen Thi Hoa Hong: Foreign Trade University
Pham Tuan Kien: Foreign Trade University
Hoang Khanh Linh: Foreign Trade University
Mai Thi Trang Linh: Foreign Trade University

Review of Applied Socio-Economic Research, 2023, vol. 26, issue 1, 54-66

Abstract: This study examines the impact of political connections on the firm performance of Vietnamese listed companies in the context of changing legal regulations in two periods: before and after the 2014 Enterprise Law officially takes effect during 2010-2022. Political connections are measured through the relationship of the Board of Directors with state organizations and the background of Vietnamese politicians. Using Pooled Ordinary Least Square regression, the results show a positive relationship between political factors and firm performance in the period 2010-2014, when civil servants are still directly involved in enterprise management. By the period 2015-2022, the influence of political connections on business activities is no longer meaningful. Therefore, the findings could provide implications for stakeholders to enhance the operations of the respective businesses.

Keywords: Board of Directors; firm performance; legal regulations; political connections; politicians (search for similar items in EconPapers)
JEL-codes: G32 G38 P16 (search for similar items in EconPapers)
Date: 2023
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