The investment behavior of politically connected firms in Indonesia

Joni Joni, Maria Natalia and Leliana Leliana

Asian Journal of Accounting Research, 2023, vol. 8, issue 4, 348-355

Abstract: Purpose - The authors examine the effect of the politically connected supervisory board (PV_SVP) on corporate investment behavior in Indonesia in the period of 2015–2019. Design/methodology/approach - The authors use Indonesian listing companies as our sample. Ordinary Least Squares regression is applied to investigate this association. Also, the authors address the endogeneity problem by using the generalized method of moments. Findings - The authors find that firms with political connections through Supervisory Boards (SBs) are negatively significantly associated with corporate investment. Our results are robust to alternative measures and to test for endogeneity. Research limitations/implications - The authors contribute to prior research by showing empirical findings on the investment behavior of politically connected firms using an emerging economy context, Indonesia, which has a unique political landscape. The authors offer practical implications for practitioners and policymakers, such as improving the corporate governance system and promoting better investment opportunities by establishing a transparent and competitive environment. Originality/value - Our study differs from other studies due to different corporate governance and political connection settings. While most prior studies examine the investment behavior of politically connected firms using the Chinese context, the authors use Indonesia which has different political and governance landscapes. Indonesia applies a two-tier board system that promotes the strategic role of the political supervisory board.

Keywords: Politically connected SBs; Emerging market; Corporate investment; Endogeneity (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)

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:eme:ajarpp:ajar-12-2022-0416

DOI: 10.1108/AJAR-12-2022-0416

Access Statistics for this article

Asian Journal of Accounting Research is currently edited by Dr. Iman Harymawan

More articles in Asian Journal of Accounting Research from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().