Political connection types and investors’ perceived risk : evidence from Malaysia

Mas Nordiana Rusli, and Norman Mohd. Saleh, and Hafizuddin-Syah B.A.M., and Mohamat Sabri Hassan, (2019) Political connection types and investors’ perceived risk : evidence from Malaysia. Asian Journal of Accounting and Governance, 12 . pp. 65-76. ISSN 2180-3838

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Official URL: https://ejournal.ukm.my/ajac/issue/view/1225

Abstract

This study examines the pervasive political influence in Malaysian businesses, specifically the investors’ perceived risk of political connection. A sample of 312 firm-year observations between 2014 to 2017 reveals that politically connected Malaysian firms are less likely to be perceived as risky compared with their non-connected peers. In particular, reduction of systematic risk in cost of equity as a proxy to perceived risk is more significant for firms connected through directorship because political figures effectively channel substantial benefits in connecting firms under his/her political power. The link between types of political connections and investors’ perceived risk provides a new insight and direction for research about governance factors that affect firm risks.

Item Type:Article
Keywords:Political connection; Perception of risk; Cost of equity; Systematic risk; Information asymmetries
Journal:Asian Journal of Accounting and Governance
ID Code:19182
Deposited By: ms aida -
Deposited On:28 Jul 2022 00:54
Last Modified:02 Aug 2022 03:30

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