The role of political connections in bad times: Evidence from the COVID-19 pandemic

This study investigates the relationship between political connections and firm financial performance during the COVID-19 pandemic. Using a difference-in-differences methodology, we found that politically connected enterprises paid more taxes, employed more employees, and suffered financial performance. This study enriches the literature on the impact of COVID-19 on enterprises and provides suggestions for regulators.

Antecedents and effect of creative accounting practices on organizational outcomes: Evidence from Bangladesh

This study examines the antecedents and effects of creative accounting practices (CAP) on organizational outcomes in Bangladesh. Thus, this research recognizes the antecedents of creative accounting, such as sustainable financial data (SFD), political connections (PC), corporate ethical values (CEV), future company orientations (FCO), and corporate governance practices (CGP). And also examine how the quality of financial reporting (QFR) and decision-making effectiveness (DME) are influenced by CAP. This study incorporates these fundamental antecedents of creative accounting practices on organizational outcomes by collecting survey data (n = 354) from publicly traded companies in the Dhaka Stock Exchange (DSE), Bangladesh. The study model has been tested through the "Partial Least Square- Structural Equation Modelling" (PLS-SEM) technique using Smart PLS v3.3 software. In addition, we pass various model fit measures, i.e., reliability, validity, factor analysis, and goodness of fit. This study finds that SFD does not work as an antecedent of creative accounting practices. But, the outcomes of the PLS-SEM confirm that PC, CEV, CFO and CGP work as an antecedent of CAP. Furthermore, the results of PLS-SEM also confirm that CAP influence the QFR in the positive direction and CAP influence the DME in the negative direction. Finally, QFR has a positive and significant impact on DME. Any study that has tested the impact of CAP on QFR & DME is yet to be found in the literature. However, policymakers, accounting bodies, regulators, and investors can consider these findings to formulate policy and investment decisions. Mainly, organizations can focus on PC, CEV, CFO and CGP to reduce CAP. But organizations need QFR and DME, which are critical components of organizational outcomes.

Environmental performance, political connection, and financial performance: evidence from global oil and gas companies

Based on the natural resource-based view theory, firms with improved environmental performance will have higher financial performance. Conversely, the neo-classical economic theory argues that improved environmental performance leads to lower financial performance. We argue that these contradicting findings are due to the political connection and treat it as the moderating variable to strengthen the positive effect of environmental performance on financial performance. Using carbon emission, spill volume, and total environmental fines as the environmental performance proxy, we only find that spill volume has a positive relationship with oil and gas companies' financial performance, supporting the natural resource-based view theory. Our results also show the positive effect of political connection on financial performance, supporting the helping-hand theory. Meanwhile, the moderating effect of political connection is only significant in weakening the negative impact of spill volume on financial performance. Practically, government regulation that bans the involvement of politicians in the boards of the oil and gas companies may allow firms to internalize the cost of the environmental damage, and could improve the environmental performance of the firms.

Lobbying and lending by banks around the financial crisis by

Despite the unprecedented levels of liquidity provided by the Federal Reserve to banks during the 2007-2008 financial crisis, lending by banks slowed dramatically during and after that global episode. In this study, we propose that, given capital constraints, the lobbying expenditures by banks to combat Dodd-Frank might have crowded out lending activity. A variety of univariate and multivariate tests show that while lending by banks fell significantly around the financial crisis, lobbying rose dramatically. Our results also show that bank lobbying and lending are imperfect substitutes during non-crisis periods. Such substitutability likely is explained by the value perceived in the political connections gained through lobbying, such as the ability to influence regulation, preferential treatment on supervisory or enforcement decisions, and protection against adverse shocks in the form of government bailouts.

Political connections, investment opportunity sets, tax avoidance: does corporate social responsibility disclosure in Indonesia have a role?

This study aims to obtain empirical evidence of the effect of political connections and investment opportunity sets on tax avoidance. In addition, the use of corporate social responsibility in this study as a moderating variable aims to examine the implementation of sustainability by companies, which is a global issue of concern to many parties today. Corporate social responsibility has rarely been used in previous studies as a moderating variable in examining the relationships between investment opportunity sets and tax avoidance and political connections and tax avoidance. This study analyzed 42 manufacturing companies listed on the Indonesia Stock Exchange from 2014 to 2019, selected through a purposive sampling method to produce 252 observations. This study used a quantitative method with two-panel data regression models, namely the model and without moderation. The results suggest that political connections and investment opportunity sets positively affect tax avoidance. Meanwhile, corporate social responsibility disclosure can weaken the positive effect of political connections and investment opportunity sets on tax avoidance. This study indicates that the Indonesia Tax Authority should include sustainability issues in refining existing tax policies.

How does Chinese central environmental inspection affect corporate green innovation? The moderating effect of bargaining intentions

Central environmental inspection (CEI) is an environmental governance tool launched by the Chinese central government in recent years. The aim of CEI is to enhance the implementation of environmental regulations by going beyond supervising enterprises to supervise local governments. Previous studies have shown that CEI is beneficial for improving corporate environmental performance, but the relationship between CEI and the environmental behavior of companies achieving a high level of environmental performance is not clear. Drawing on principal-agent theory, this study explains how CEI influences corporate green innovation by changing the incentive structures of local governments and firms for adopting different environmental strategies. Moreover, two boundary conditions between CEI and corporate green innovation are identified: political connections and industry competition. The boundary conditions affect the individual and collective bargaining intentions of companies to comply with environmental regulations. We test our hypotheses by using a sample of 1152 publicly traded industrial firms in China from 2014 to 2018. Our findings show that CEI is conducive to corporate green innovation. This positive effect is strengthened in politically connected firms or firms in highly monopolized industries with lower bargaining intentions. Our study contributes to a better understanding of the effect of CEI on micro (firm-level) environmental behaviors and the antecedents of corporate green innovation.

Can "new infrastructure" reverse the "growth with pollution" profit growth pattern? An empirical analysis based on listed companies in China

With the increasing severity of environmental regulations, Chinese enterprises are gradually transforming from the profit growth pattern of "growth with pollution" to green development. However, this paper finds that this transformation is not complete. While catering to the national environmental protection governance requirements, some enterprises still persist the profit growth pattern of "growth with pollution." How to solve this problem? By attracting government subsidies, reducing tax burdens, and increasing the proportion of technical personnel employed, we theoretically and empirically demonstrate that the positive effect of "new infrastructure" in accelerating enterprises' transformation away from the profit growth pattern of "growth with pollution" to sustainable development. In the heterogeneity analysis section, we found that in enterprises with higher political correlation, more technical personnel, and lower labor cost, the "new infrastructure" has a stronger restraining effect on the "growth with pollution" pattern.

Dataset on political connections, Sharia, and abnormal returns surrounding M&A announcement in the Indonesian stock market

This article presents a dataset on political connections, Sharia, and abnormal returns surrounding the M&A announcement of listed firms on Indonesia Stock Exchange (IDX) during the period 2010-2016. The dataset provides both short-run and long-run abnormal returns. Using an event study methodology, I calculate cumulative abnormal returns (CAR) as short-run abnormal returns and buy-and-hold abnormal returns (BHAR) as long-run abnormal returns. This dataset may be useful for researchers who study political connections, Sharia, and M&A performance. The data presented in this article are related to the research article entitled "Political connections, Sharia and M&A performance: Evidence from Indonesia" (Wahyono, 2021) [1].

Environmental information disclosure, political connections and innovation in high-polluting enterprises

Using the data on 110 listed high-polluting enterprises in China, this study investigates the impact of environmental information disclosure (EID) on the innovation of high-polluting enterprises. The results indicate that EID has a positive and significant impact the innovation of high-polluting enterprises but that political connections weaken the impact of EID on enterprises' innovation. The results of the grouping tests indicate that EID can promote innovation in both state-owned and non-state owned high-polluting enterprises, and political connections have weakened the impact of EID on enterprises' innovation in SOEs. Results of findings in different regions show that EID significantly promotes innovation in those high-polluting enterprises in coastal areas but has no significant impact on the innovation by high-polluting enterprises in inland regions. In the further mechanism testing, this paper finds that EID stimulates innovation by enterprises through increases in business income.

The politics of bailouts: Estimating the causal effects of political connections on corporate bailouts during the 2008-2009 US financial crisis

In 2008, as the financial crisis unfolded in the United States, the banking industry elevated its lobbying and campaign spending activities. By the end of 2008, and during 2009, the biggest political spenders, on average, received the largest bailout packages. Is that relationship causal? In this paper, I examine the effect of political connections on the allocation of funds from the Troubled Asset Relief Program (TARP) to the US financial services industry during the 2008-2009 financial crisis. I find that TARP recipients that lobbied the government, donated to political campaigns, or whose top executives had direct connections to politics received better bailout deals. I estimate regression discontinuity design and instrumental variable models to uncover how election outcomes for politicians in close races affected the distribution of bailout funds for connected firms. The results do not imply that some banks were deliberately favored over others, just that favored banks benefited because of their proximity to the right people in power. If being politically connected matters in general, in times of crisis it matters even more.

SUPPLEMENTARY INFORMATION

The online version contains supplementary material available at 10.1007/s11127-020-00871-w.