Partisan political connections, ethnic tribalism, and firm performance

Vincent Tawiah, Abdulrasheed Zakari and Yan Wang ()
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Vincent Tawiah: Dublin City University
Abdulrasheed Zakari: Beijing Institute of Technology
Yan Wang: Nottingham Trent University

Review of Quantitative Finance and Accounting, 2022, vol. 58, issue 4, No 2, 1362 pages

Abstract: Abstract This paper investigates the impact of partisan political connections and ethnic tribalism on firm performance in a hyper-partisan political environment. Although existing literature generally shows that political connections improve firm performance, we argue that under the theory of electoral competition, political connections can be a double-edged sword because of the tension of partisan politics. Hence, we expect that changes in government can affect firm performance. Using a unique dataset from Nigeria, we find that political connections are valuable when a firm's patron party is in power, whereas they are detrimental to firm value when their patron party is in opposition. Furthermore, we find that CEO ethnic tribal affiliation with the President improves firm performance even when the firm's patron party is in opposition. This paper extends the literature on political connections and helps managers and policymakers understand the timely use of political connections in a hyper-partisan environment.

Keywords: Partisan politics; Political connections; Tribalism; Firm performance (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 G38 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11156-021-01026-8

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