Cross-Country Differences in the Effect of Political Connections on Stock Price Informativeness

Yuanto Kusnadi, B. Srinidhi
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引用次数: 5

Abstract

Abstract Using an international sample of firms from 28 countries, we document that there exists a negative relationship between political connections and the informativeness of stock price, as measured by idiosyncratic volatility (IV). This finding is robust to alternative regression specifications, sub-samples analyses, and concerns related to endogeneity. A more detailed analysis shows that out of the different types of possible connections, the connectedness of the owners is the primary driver of this result. Further, the negative association is only significant for firms in countries characterized by low institutional quality (corrupted countries, countries with low access to external equity markets, and countries with low media penetration). There is no evidence of any relation between political connections and stock price informativeness for firms in countries characterized by high institutional quality. Overall, our results show that although political connections exacerbate rent-seeking that weaken the firms’ information environment on average, the negative information consequences are compensated by the countries’ institutional quality.
政治关系对股票价格信息性影响的跨国差异
利用来自28个国家的公司的国际样本,我们证明了政治联系与股票价格的信息性之间存在负相关关系,正如特殊波动率(IV)所衡量的那样。这一发现对于替代回归规范、子样本分析和与内生性相关的担忧都是稳健的。更详细的分析表明,在不同类型的可能连接中,所有者的连通性是这一结果的主要驱动因素。此外,这种负相关关系仅对机构质量低的国家(腐败国家、外部股权市场准入低的国家和媒体渗透率低的国家)的公司有意义。没有证据表明,在以高制度质量为特征的国家中,公司的政治联系与股价信息之间存在任何关系。总体而言,我们的研究结果表明,尽管政治关系加剧了寻租,平均而言削弱了企业的信息环境,但负面的信息后果被国家的制度质量所补偿。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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