A Recent Literature Review on Corporate Political Connections

Irwan Trinugroho


It has always been an interesting issue deliberating the connectedness between corporation and political power. There have been a substantial number of papers in the academic literature empirically studying what so call corporate political connections over the last 17 years. Using 81 papers published in 2010-2017 in finance, economics, accounting, management and other journals, in this present paper, I provide a recent literature review on firm political connections particularly with respect to the empirical studies discussing the impact of being politically connected firms. A number of issues related to the effect of political connections on corporate strategy, behaviors and outcomes have been addressed. Few other papers provide different perspective by looking at the antecedents of corporate political connections and the contingency role of such connections. Little is found on the development of new measures of corporate political connections. Finally, it could be suggested that the interaction between political connections and the technological-based business innovation would be an interesting issue to study.


Connections; Literature Review; Measures; Future Research.

Full Text:



Agrawal, A & Knoeber, C. R. 2001. Do Some Outside Directors Play a Political Role? Do Some Outside Directors Play a Political Role?. Journal of Law and Economics. 4 (1): 179-198.

Al-Hadi, A., Taylor, G & Al-Yahyaee, K. H. 2016. Ruling Family Political Connections and Risk Reporting: Evidence from the GCC. International Journal of Accounting. 51 (4): 504-524.

Blau, B. M., Brough, T. J & Thomas, D. W. 2013. Corporate Lobbying, Political Connections and the Bailout of Banks. Journal of Banking and Finance. 37 (8): 3007-3017.

Bliss, M. A & Gul, F. A. 2012a. Political Connection and Cost of Debt: Some Malaysian Evidence. Journal of Banking and Finance. 36 (5): 1520-1527.

Bliss, M. A & Gul, F. A. 2012b. Political Connection and Leverage: Some Malaysian Evidence. Journal of Banking and Finance. 36 (8): 2344-2350.

Boubakri, N., Guedhami, O., Mishra, D & Saffar, W. 2012. Political Connections and the Cost of Equity Capital. Journal of Corporate Finance. 18 (3): 541-559.

Boubakri, N., Ghoul, S. E & Saffar, W. 2013. Cash Holdings of Politically Connected Firms. Journal of Multinational Financial Management. 23 (4): 338-355.

Braam, G., Nandy, M., Weitzel, U & Lodh, S. 2015. Accrual-Based and Real Earnings Management and Political Connections. International Journal of Accounting. 50 (2): 111-141.

Brown, R. S. 2016. Lobbying, Political Connectedness and Financial Performance in the Air Transportation Industry. Journal of Air Transport Management. 54: 61-69.

Chan, K. S., Dang, V. Q. T & Yan, I. K. M. 2012. Chinese Firms Political Connection, Ownership and Financing Constraints. Economics Letters. 115 (2): 164-167.

Claessens, S., Feijen, L & Schmukler, L. 2008. Political Connections and Preferential Access to Finance: the Role of Campaign Contributions. Journal of Financial Economics. 88 (3): 554-580.

Ding, S., Jia, C., Wu, Z & Zhang, X. 2014. Executive Political Connections and Firm Performance: Comparative Evidence from Privately-Controlled and State-Owned Enterprises. International Review of Financial Analysis. 36 (3):153-167.

Disli, M, Schoors, K & Meir, J. 2013. Political Connections and Depositor Discipline. Journal of Financial Stability. 9 (4): 804-819.

Faccio, M., Masulis, R & McConnell, J. J. 2006. Political Connections and Corporate Bailouts. Journal of Finance. 61 (1): 2597-2635.

Faccio, M. 2006. Politically Connected Firms. American Economic Review. 96 (3): 369-386.

Faccio, M. 2010. Differences between Politically-Connected Firms and Non-Connected Firms: a Cross Country Analysis. Financial Management. 39 (2): 905-928.

Fan, J. P. H., Wong, T. J & Zhang, T. 2007. Politically Connected CEOs, Corporate Governance and Post-IPO Performance of Chinas Newly Partially Privatized Firms. Journal of Financial Economics. 84 (4): 330-357.

Fisman, R. 2001. Estimating the Value of Political Connections. American Economic Review. 91 (4): 1095-1102.

Fu, J. S. D & Todo, Y. 2017. Can Firms with Political Connections Borrow More than those Without? Evidence from Firm-Level Data for Indonesia. Journal of Asian Economics. 52: 45-55.

Gu, H., Ryan, C., Bin, L & Wei, G. 2013. Political Connections, Guanxi and Adoption of CSR Policies in the Chinese Hotel Industry: is There a Link?. Tourism Management. 34: 231-235.

Habib, A., Muhammadi, A. H & Jiang, H. 2017. Political Connections and Related Party Transactions: Evidence from Indonesia. International Journal of Accounting. 52 (1): 45-63.

Hillman, A. J., Zardkoohi, A & Bierman, L. 1999. Corporate Political Strategies and Firm Performance: Indications of Firm-Specific Benefits from Personal Service in the U.S. Government. Strategic Management Journal. 20 (1): 67-81.

Hillman, A. J., Keim, G. D & Schuler, D. 2004. Corporate Political Activity: a Review and Research Agenda. Journal of Management. 30 (6): 837-857.

Hou, Q., Hu, M & Yuan, Y. 2017. Corporate Innovation and Political Connections in Chinese Listed Firms. Pacific-Basin Finance Journal. 46: 158-176.

Hung, C. H. D., Jiang, Y., Liu, F. H., Tu, H & Wang, S. 2017. Bank Political Connections and Performance in China. Journal of Financial Stability. 32 (5): 57-69.

Keillor, B. D & Hult, G. T. M. 2004. Predictors of Firm-Level Political Behavior in the Global Business Environment: an Investigation of Specific Activities Employed by US Firms. International Business Review. 13 (3): 309-329.

Khwaja, A.I & Mian, A. 2005. Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market. Quarterly Journal of Economics. 120 (4): 1371-1411.

Leuz, C & Oberholzer-Gee, F. 2006. Political Relationships, Global Financing and Corporate Transparency: Evidence from Indonesia. Journal of Financial Economics. 81: 411-439

Li, H., Meng, L., Wang, Q & Zhou, L. A., 2008. Political Connections, Financing and Firm Performance: Evidence from Chinese Private Firms. Journal of Development Economics. 87 (1): 283-299.

Li, J & Zhao, L. 2015. The Costs of Socializing with Government Officials: a New Measure of Corporate Political Connections. China Journal of Accounting Research. 8 (1): 25-39.

Lin, K. J., Tan, J., Zhao, L & Karim, K. 2015. In the Name of Charity: Political Connections and Strategic Corporate Social Responsibility in a Transition Economy. Journal of Corporate Finance. 32: 327-346.

Liedong, T. A & Rajwani, T. 2017. The Impact of Managerial Political Ties on Corporate Governance and Debt Financing: Evidence from Ghana. Long Range Planning. Forthcoming.

Luo, J., Gong, M., Lin, Y & Fang, Q. 2016. Political Connections and Stock Price Crash risk: Evidence from China. Economics Letters. 147: 90-92.

Nys, E., Tarazi, A & Trinugroho, I. 2015. Political Connections, Bank Deposits and Formal Deposit Insurance. Journal of Financial Stability. 19 (4): 83-104.

Ozer, M., Alakent, E & Ahsan, M. 2010. Institutional Ownership and Corporate Political Strategies: Does Heterogeneity of Institutional Owners Matter?. Strategic Management Review. 4 (1): 18-29.

Platikanova, P. 2017. Investor-Legislators: Tax Holiday for Politically Connected Firms. British Accounting Review. 49 (4): 380-398.

Polsiri, P & Jiraporn, P. 2012. Political Connections, Ownership Structure and Financial Institution Failure. Journal of Multinational Financial Management. 22 (1-2): 39-53.

Shaffer, B. 1995. Firm-Level Responses to Government Regulation: Theoretical and Research Approaches. Journal of Management. 21 (3): 495-514.

Shen, C. H., Lin, C. Y & Wang, Y. C. 2015. Do Strong Corporate Governance Firms Still Require Political Connection and Vice Versa?. International Review of Economics and Finance. 39 (3): 107-120.

Song, M., Ai, H & Li, X. 2015. Political Connections, Financing Constraints and the Optimization of Innovation Efficiency among Chinas Private Enterprises. Technological Forecasting and Social Change. 92 (3): 290-299.

Song, Y., Yang, J & Yang, Q. 2016. Do Firms Political Connections Depress the Union Wage Effect? Evidence from China. China Economic Review. 38 (3):183-198.

Su, Z. Q., Fung, H. G., Huang, D. S & Shen, C. H. 2014. Cash Dividends, Expropriation and Political Connections: Evidence from China. International Review of Economics and Finance. 29 (1): 260-272.

Sutopo, B., Trinugroho, I & Damayanti, S. M. 2017. Politically Connected Banks: Some Indonesian Evidence. International Journal of Business and Society. 18 (1): 83-94.

Tripathi, M., Ansolabehere, S & Snyder, J. 2002. Are PAC Contributions and Lobbying Linked? New Evidence from the 1995 Lobby Disclosure Act. Business and Politics. 4 (2): 1-26.

Wang, D., Ma, G., Song, X & Liu, Y. 2016. Political Connection and Business Transformation in Family Firms: Evidence from China. Journal of Family Business Strategy. 7 (2): 117-130.

Wang, Z., Chen, M. H., Chin, C. L & Zheng, Q. 2017. Managerial Ability, Political Connections and Fraudulent Financial Reporting in China. Journal of Accounting and Public Policy. 36 (2): 141-162.

White, G. O., Fainshmidt, S & Rajwani, T. 2017. Antecedents and Outcomes of Political Tie Intensity: Institutional and Strategic Fit Perspectives. Journal of International Management. Forthcoming. June 21, 2017.

Wu, W., Wu, C., Zhou, C & Wu, J. 2012. Political Connections, Tax Benefits and Firm Performance: Evidence from China. Journal of Accounting and Public Policy. 31 (3): 277-300.

Yang, D., Lu, Z & Luo, D. 2014. Political Connections, Media Monitoring and Long-Term Loans. China Journal of Accounting Research. 7 (3): 165-177.

Yeh, Y. H., Shu, P. G & Chiu, S. B. 2013. Political Connections, Corporate Governance and Preferential Bank Loans. Pacific Basin Finance Journal. 21 (1): 1079-1101.

Zhang, H., Li, L., Zhou, D & Zhou, P. 2014. Political Connections, Government Subsidies and Firm Financial Performance: Evidence from Renewable Energy Manufacturing in China. Renewable Energy. 63 (3): 330-336.

View Counter: Abstract - 696 and PDF - 633


  • There are currently no refbacks.