Military Political Connection and Firm Value—Empirical Evidence from a Natural Experiment in Thailand

Jingjing Tang, Haijian Zeng, Fangying Pang and Lanke Huang

Emerging Markets Finance and Trade, 2022, vol. 58, issue 7, 1898-1912

Abstract: This paper uses the exogenous shock- Thailand military coup on May 22, 2014-as a natural experiment to test the impact of military political connections on the value of Thai’s listed firms. Results show that the military coup will bring significant benefits to the share price of listed firms with military political connections. Moreover, the DID estimations show that the military rule can significantly increase the Tobin’s Q of military political affiliates after the military coup. The main influential mechanism is that, after the military is in power, the listed firms will hire personnel with military background to enter the management. This move will bring long-term financing convenience to the military politically connected firms and enable them to use more funds to capital investment and R & D activities.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:58:y:2022:i:7:p:1898-1912

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DOI: 10.1080/1540496X.2021.1944852

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