Political Connections, Family Ownership, and Firm Performance: An Emerging Economy

Sabeeh Ullah, Sumaira Khan, Shahzad Hussain, Mehtab Alam and Muhammad Haroon

International Journal of the Economics of Business, 2021, vol. 28, issue 3, 471-487

Abstract: Emerging economies are characterised by a high proportion of family-owned businesses, significant political corruption, and a weak legal system which creates a more favourable environment for politically-connected family firms. Hence, we investigate the effect of political connections on firm performance in family and non-family-owned firms through advanced panel estimation techniques. Our result is based on a sample of publicly listed 150 non-financial firms from Pakistan Stock Exchange (PSX) over the period 2013–2018. We demonstrate that politically connected family-owned firms perform better than non-family owned connected firms. These findings have important policy implications for countries such as Pakistan which have experienced recent increases in the number of family-owned firms.

Date: 2021
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DOI: 10.1080/13571516.2021.1941715

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