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

Taufiq Arifin, Iftekhar Hasan, Rezaul Kabir

Research output: Contribution to conference › Paper › Academic › peer-review

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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 languageEnglish
Number of pages43
Publication statusPublished - 30 May 2018
Event41st 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

Conference41st Annual Congress of the European Accounting Association, EAA 2018
Abbreviated titleEAA
CountryItaly
CityMilan
Period30/05/18 → 1/06/18
Internet address

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Political connections
Cost of debt
Democracy
Financial distress

Keywords

  • Corporate Governance
  • Cost of debt
  • Political connection

Cite this

Arifin, T., Hasan, I., & Kabir, R. (2018). Transactional and Relational Approaches to Political Connections and the Cost of Debt. Paper presented at 41st Annual Congress of the European Accounting Association, EAA 2018, Milan, Italy.
Arifin, Taufiq ; Hasan, Iftekhar ; Kabir, Rezaul. / Transactional and Relational Approaches to Political Connections and the Cost of Debt. Paper presented at 41st Annual Congress of the European Accounting Association, EAA 2018, Milan, Italy.43 p.
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Arifin, T, Hasan, I & Kabir, R 2018, 'Transactional and Relational Approaches to Political Connections and the Cost of Debt' Paper presented at 41st Annual Congress of the European Accounting Association, EAA 2018, Milan, Italy, 30/05/18 - 1/06/18, .

Transactional and Relational Approaches to Political Connections and the Cost of Debt. / Arifin, Taufiq ; Hasan, Iftekhar; Kabir, Rezaul.

2018. Paper presented at 41st Annual Congress of the European Accounting Association, EAA 2018, Milan, Italy.

Research output: Contribution to conference › Paper › Academic › peer-review

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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.

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Arifin T, Hasan I, Kabir R. Transactional and Relational Approaches to Political Connections and the Cost of Debt. 2018. Paper presented at 41st Annual Congress of the European Accounting Association, EAA 2018, Milan, Italy.

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