Transactional and Relational Approaches to Political Connections and the Cost of Debt

Taufiq  Arifin; Iftekhar Hasan; Rezaul Kabir

Transactional and Relational Approaches to Political Connections and the Cost of Debt

Taufiq Arifin, Iftekhar Hasan, Rezaul Kabir

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Abstract

This paper highlights how debtholders value political connections. Specifically, it investigates whether lenders favor transactional connection as opposed to repeated relational connection. Tracing firms in a politically volatile emerging democracy, the
paper confirms that firms with transactional political connection strategy experience a relatively lower cost of debt than those with relational strategy. The results are more pronounced for firms with high risk of financial distress.

Original language	English
Number of pages	43
Publication status	Published - 30 May 2018
Event	41st Annual Congress of the European Accounting Association, EAA 2018 - Bocconi University, Milan, Italy Duration: 30 May 2018 → 1 Jun 2018 Conference number: 41 http://eaa2018.eaacongress.org/r/home

Conference

Conference	41st Annual Congress of the European Accounting Association, EAA 2018
Abbreviated title	EAA
Country/Territory	Italy
City	Milan
Period	30/05/18 → 1/06/18
Internet address	http://eaa2018.eaacongress.org/r/home

Keywords

Corporate Governance
Cost of debt
Political connection

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Political connections and the cost of debt - 15Jan2018Final published version, 375 KB

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title = "Transactional and Relational Approaches to Political Connections and the Cost of Debt",

abstract = "This paper highlights how debtholders value political connections. Specifically, it investigates whether lenders favor transactional connection as opposed to repeated relational connection. Tracing firms in a politically volatile emerging democracy, thepaper confirms that firms with transactional political connection strategy experience a relatively lower cost of debt than those with relational strategy. The results are more pronounced for firms with high risk of financial distress.",

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AU - Hasan, Iftekhar

AU - Kabir, Rezaul

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PY - 2018/5/30

Y1 - 2018/5/30

N2 - This paper highlights how debtholders value political connections. Specifically, it investigates whether lenders favor transactional connection as opposed to repeated relational connection. Tracing firms in a politically volatile emerging democracy, thepaper confirms that firms with transactional political connection strategy experience a relatively lower cost of debt than those with relational strategy. The results are more pronounced for firms with high risk of financial distress.

AB - This paper highlights how debtholders value political connections. Specifically, it investigates whether lenders favor transactional connection as opposed to repeated relational connection. Tracing firms in a politically volatile emerging democracy, thepaper confirms that firms with transactional political connection strategy experience a relatively lower cost of debt than those with relational strategy. The results are more pronounced for firms with high risk of financial distress.

KW - Corporate Governance

KW - Cost of debt

KW - Political connection

M3 - Paper

T2 - 41st Annual Congress of the European Accounting Association, EAA 2018

Y2 - 30 May 2018 through 1 June 2018

ER -

Transactional and Relational Approaches to Political Connections and the Cost of Debt

Abstract

Conference

Keywords

Access to Document

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Cite this