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Faccio, M. (2006). Politically connected firms. American Economic Review, 96(1), 369–386.
Fan, J. P. H., Wong, T. J., & Zhang, T. (2007). Politically connected CEOs, corporate governance, and Post-IPO performance of China’s newly partially privatized firms. Journal of Financial Economics, 84(2), 330–357.
Fraser, D. R., Zhang, H., & Derashid, C. (2006). Capital structure and political patronage: The case of Malaysia. Journal of Banking and Finance, 30(4), 1291–1308.
Fu, J., Shimamoto, 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.
Fukuoka, Y. (2013). Indonesia's 'democratic transition' revisited: A clientelist model of political transition. Democratization, 20(6), 991–1013.
Gebhardt, W., Lee, C., Swaminathan, B. (2001). Towards an implied cost of capital. Journal of Accounting Research, 39(1), 135-176.
Goldman, E., Rocholl, J., & So, J. (2009). Do politically connected boards affect firm value. Review of Financial Studies, 22(6), 2331–2360.
Gul, F. A. (2006). Auditors’ response to political connections and cronyism in Malaysia. Journal of Accounting Research, 44(5), 931–963.
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.
Hu, Ning., Chen, H., & Liu, Muhua. (2018). Religious atmosphere and the cost of equity capital: Evidence from China. China Journal of Accounting Research
Johnson, S., & Mitton, T. (2003). Cronyism and capital controls: Evidence from Malaysia. Journal of Financial Economics, 67(2), 351–382.
Khwaja, A. I., & Mian, A. (2005). Do Lenders Favor Politically Connected. Quarterly Journal of Economics, (November), 1371–1411.
Krueger, A. O. (1974). The Political Economy Seeking of the Society. The American Economic Review, 64(3), 291–303.
Leuz, C., & Oberholzer-Gee, F. (2006). Political relationships, global financing, and corporate transparency: Evidence from Indonesia. Journal of Financial Economics, 81(2), 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(2), 283–299.
Mietzner, M. (2006). The politics of military reform in post-Suharto Indonesia: Elite conflict, nationalism, and institutional resistance. Washington, D.C.: East-West Center Washington.
Mobarak, A., Purbasari, D. (2006). Corrupt protection for sale to firms: evidence from Indonesia. Unpublished working paper, University of Colorado at Boulder.
Nys, E., Tarazi, A., & Trinugroho, I. (2014). Political connections, bank deposits, and formal deposit insurance. Journal of Financial Stability, 19, 83–104.
Ohlson, J., Juettner-Nauroth, B. (2005). Expected EPS and EPS growth as determinants of value.Review of Accounting Studies, 10, 349–365.
Shleifer, A., & Vishny, R. W. (1994). Politicians and firms * andrei shleifer and robert w. vishny. The Quarterly Journal of Economics, (November), 995–1025.
Wu, W., Wu, C., & Rui, O. M. (2012). Ownership and the Value of Political Connections: Evidence from China. European Financial Management, 18(4), 695–729.
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.
Chaney, P. K., Faccio, M., & Parsley, D. (2011). The quality of accounting information in politically connected firms. Journal of Accounting and Economics, 51(1–2), 58–76.
Claessens, S., Feijen, E., & Laeven, L. (2008). Political connections and preferential access to finance: The role of campaign contributions. Journal of Financial Economics, 88(3), 554–580.
Claus, J., Thomas, J. (2001). Equity premia as low as three percent? Evidence from analysts' earnings forecasts for domestic and international stock markets. Journal of Finance, 56, 1629–1666.
Easton, P. (2004). PE ratios, PEG ratios and estimating the implied expected rate of return on equity capital. Accounting Review, 79(1), 73-95.
Faccio, M. (2006). Politically connected firms. American Economic Review, 96(1), 369–386.
Fan, J. P. H., Wong, T. J., & Zhang, T. (2007). Politically connected CEOs, corporate governance, and Post-IPO performance of China’s newly partially privatized firms. Journal of Financial Economics, 84(2), 330–357.
Fraser, D. R., Zhang, H., & Derashid, C. (2006). Capital structure and political patronage: The case of Malaysia. Journal of Banking and Finance, 30(4), 1291–1308.
Fu, J., Shimamoto, 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.
Fukuoka, Y. (2013). Indonesia's 'democratic transition' revisited: A clientelist model of political transition. Democratization, 20(6), 991–1013.
Gebhardt, W., Lee, C., Swaminathan, B. (2001). Towards an implied cost of capital. Journal of Accounting Research, 39(1), 135-176.
Goldman, E., Rocholl, J., & So, J. (2009). Do politically connected boards affect firm value. Review of Financial Studies, 22(6), 2331–2360.
Gul, F. A. (2006). Auditors’ response to political connections and cronyism in Malaysia. Journal of Accounting Research, 44(5), 931–963.
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.
Hu, Ning., Chen, H., & Liu, Muhua. (2018). Religious atmosphere and the cost of equity capital: Evidence from China. China Journal of Accounting Research
Johnson, S., & Mitton, T. (2003). Cronyism and capital controls: Evidence from Malaysia. Journal of Financial Economics, 67(2), 351–382.
Khwaja, A. I., & Mian, A. (2005). Do Lenders Favor Politically Connected. Quarterly Journal of Economics, (November), 1371–1411.
Krueger, A. O. (1974). The Political Economy Seeking of the Society. The American Economic Review, 64(3), 291–303.
Leuz, C., & Oberholzer-Gee, F. (2006). Political relationships, global financing, and corporate transparency: Evidence from Indonesia. Journal of Financial Economics, 81(2), 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(2), 283–299.
Mietzner, M. (2006). The politics of military reform in post-Suharto Indonesia: Elite conflict, nationalism, and institutional resistance. Washington, D.C.: East-West Center Washington.
Mobarak, A., Purbasari, D. (2006). Corrupt protection for sale to firms: evidence from Indonesia. Unpublished working paper, University of Colorado at Boulder.
Nys, E., Tarazi, A., & Trinugroho, I. (2014). Political connections, bank deposits, and formal deposit insurance. Journal of Financial Stability, 19, 83–104.
Ohlson, J., Juettner-Nauroth, B. (2005). Expected EPS and EPS growth as determinants of value.Review of Accounting Studies, 10, 349–365.
Shleifer, A., & Vishny, R. W. (1994). Politicians and firms * andrei shleifer and robert w. vishny. The Quarterly Journal of Economics, (November), 995–1025.
Wu, W., Wu, C., & Rui, O. M. (2012). Ownership and the Value of Political Connections: Evidence from China. European Financial Management, 18(4), 695–729.
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Affiliations
Kris Brantas Abiprayu
State Semarang University
How to Cite
1.
Abiprayu K. Political Connection and Cost of Capital Indonesian Case Study. MAJ [Internet]. 12Aug.2021 [cited 19Nov.2024];10(2):179-85. Available from: http://journal.unnes.ac.id/sju/maj/article/view/48927
Political Connection and Cost of Capital Indonesian Case Study
Vol 10 No 2 (2021): Management Analysis Journal
Submitted: Aug 9, 2021
Published: Aug 12, 2021
Abstract
This research aims at examining the impact of political connection on financing facilitation by measuring cost of capital imposed to non-finance companies in Indonesia from 2009-2017. During the period, there is a change in the Indonesian government which is initially led by President Yudhoyono (2009-2014) from the Democratic Party and then by President Joko Widodo (2014-now) from the Indonesian Democratic Party of Struggle. Opposing one another, both parties share different political views. Therefore, it is interesting to find out how governmental change influence cost of capital. The research sample is financial statements of non-finance companies.