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Political connections and the cost of equity capital

Show simple item record Boubakri N. Guedhami O. Mishra D. Saffar W.
dc.contributor.editor 2012 2017-09-07T07:51:26Z 2017-09-07T07:51:26Z 2012
dc.identifier 10.1016/j.jcorpfin.2012.02.005
dc.identifier.issn 09291199
dc.description.abstract Motivated by recent research on the costs and benefits of political connection, we examine the cost of equity capital of politically connected firms. Using propensity score matching models, we find that politically connected firms enjoy a lower cost of equity capital than their non-connected peers. We find further that political connections are more valuable for firms with stronger ties to political power. In additional analyses, we find that the effect of political connection on firms' equity financing costs is influenced by the prevailing country-level institutional and political environment, and by firm characteristics. Taken together, our findings provide strong evidence that investors require a lower cost of capital for politically connected firms, which suggests that politically connected firms are generally considered less risky than non-connected firms. © 2012 Elsevier B.V.
dc.format.extent Pages: (541-559)
dc.language English
dc.publisher AMSTERDAM
dc.relation.ispartof Publication Name: Journal of Corporate Finance; Publication Year: 2012; Volume: 18; no. 3; Pages: (541-559);
dc.source Scopus
dc.title Political connections and the cost of equity capital
dc.type Article
dc.contributor.affiliation Boubakri, N., American University of Sharjah, United Arab Emirates
dc.contributor.affiliation Guedhami, O., Moore School of Business, University of South Carolina, Columbia, SC 29208, United States
dc.contributor.affiliation Mishra, D., Edwards School of Business, University of Saskatchewan, Saskatoon, SK, S7N 5A7, Canada
dc.contributor.affiliation Saffar, W., Olayan School of Business, American University of Beirut, 1107 2020 Beirut, Lebanon
dc.contributor.authorAddress Boubakri, N.1705 College Street, Columbia, SC 29208, United States; email:
dc.contributor.authorCorporate University: American University of Beirut; Faculty: Suliman S. Olayan School of Business; Department: School of Business;
dc.contributor.authorDepartment School of Business
dc.contributor.authorFaculty Suliman S. Olayan School of Business
dc.contributor.authorInitials Boubakri, N
dc.contributor.authorInitials Guedhami, O
dc.contributor.authorInitials Mishra, D
dc.contributor.authorInitials Saffar, W
dc.contributor.authorReprintAddress Guedhami, O (reprint author), 1705 Coll St, Columbia, SC 29208 USA.
dc.contributor.authorUniversity American University of Beirut
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dc.description.citedCount 8
dc.description.citedTotWOSCount 10
dc.description.citedWOSCount 10
dc.format.extentCount 19
dc.identifier.scopusID 84858432044
dc.publisher.address PO BOX 211, 1000 AE AMSTERDAM, NETHERLANDS
dc.relation.ispartOfISOAbbr J. Corp. Financ.
dc.relation.ispartOfIssue 3
dc.relation.ispartofPubTitle Journal of Corporate Finance
dc.relation.ispartofPubTitleAbbr J. Corp. Financ.
dc.relation.ispartOfVolume 18
dc.source.ID WOS:000303692900007
dc.type.publication Journal
dc.subject.otherAuthKeyword Corporate governance
dc.subject.otherAuthKeyword Cost of capital
dc.subject.otherAuthKeyword Political connections
dc.subject.otherKeywordPlus PRIVATIZED FIRMS
dc.subject.otherKeywordPlus STOCK RETURNS
dc.subject.otherKeywordPlus IMPLIED COST
dc.subject.otherKeywordPlus CROSS-SECTION
dc.subject.otherKeywordPlus DISCLOSURE
dc.subject.otherKeywordPlus RISK
dc.subject.otherKeywordPlus INFORMATION
dc.subject.otherKeywordPlus OWNERSHIP
dc.subject.otherKeywordPlus BENEFITS
dc.subject.otherWOS Business, Finance

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