The impact of political connections on the quality of corporate governance

Saidatou Dicko

International Journal of Corporate Governance, 2016, vol. 7, issue 3, 247-273

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).

Keywords: ISS index; Institutional Shareholder Services Governance Index; political connections; risk levels; corporate governance; politically connected firms; shareholder rights; compensation structure; governance risk; board structure; auditing; risk oversight. (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijcgov:v:7:y:2016:i:3:p:247-273

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