Political Connections and Leverage: Firm‐level Evidence from Pakistan |
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| Authors: | Abubakr Saeed Yacine Belghitar Ephraim Clark |
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| Affiliation: | 1. Middlesex University, London, UK;2. Department of Business and Economics, Foundation University, Rawalpindi, Pakistan;3. Cranfield School of Management, Cranfield University, Bedford, UK;4. SKEMA, Universite de Lille Nord de France, Lille, France;5. ESSCA Business School, Angers, France;6. Paris‐Dauphine University, Paris, France |
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| Abstract: | This study investigates the impact of political connections on corporate financing decisions using a sample of listed Pakistani firms over the period 2002–2010. We find a positive and significant link between long‐term debt and political connections, which reflects greater access to credit. Such preferential treatment escalates with the strength of the connected politician. Furthermore, positive effects of political connections are seen to be stronger for large firms and those affiliated with business groups. Copyright © 2014 John Wiley & Sons, Ltd. |
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