Is political connection a panacea for corporate turnaround?—An analysis based on the resource-based view during the global financial crisis

Gaoyan Xu, Wenhao Dong and Shiliang Hu

Asia-Pacific Journal of Accounting & Economics, 2022, vol. 29, issue 3, 743-760

Abstract: This paper constructs a three-stage model of corporate turnaround, beginning with political connections’ affects declining companies’ implementation of turnaround strategies. The model also explores political connections’ role in corporate turnaround in the context of the most recent global financial crisis. This study discovered that political connections exhibited a weaker ability to allocate resources in the financial crisis. And the government would impede the implementations of turnaround strategies as an important stakeholder. Therefore, political connections significantly and negatively impact corporate turnaround. Through group testing, this paper further demonstrates that companies more dependent on political connections experience more significant, negative impacts.

Date: 2022
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DOI: 10.1080/16081625.2020.1789480

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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