Political connections and firm operational efficiencies: evidence from a developing country

Abubakr Saeed (), Yacine Belghitar () and Ephraim Clark
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Abubakr Saeed: COMSATS Institute of Information Technology
Yacine Belghitar: Cranfield University

Review of Managerial Science, 2017, vol. 11, issue 1, No 8, 224 pages

Abstract: Abstract This paper investigates the impact of political connections on firm operational efficiencies. We test the political interventions in investment and employment decisions. Our results provide strong support for the presence of investment inefficiencies and excessive employment amongst politically connected firms, whereas the detrimental effect of political interventions is substantially larger on employment decisions. We further find that such operational inefficiencies are more pronounced for low-growth connected firms. Finally, the economy-wide cost of the excessive employments is estimated to be 0.19 % of GDP annually.

Keywords: Political connections; Operational efficiencies; Employments; Investment (search for similar items in EconPapers)
JEL-codes: G31 G34 M51 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s11846-015-0185-5

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