TY - JOUR
T1 - Having the wrong friends at the wrong time: Effects of political turmoil on politically-connected firms.
AU - Dang, Vinh
AU - SO, Erin Pik-ki
N1 - Publisher Copyright:
© 2018 Elsevier B.V.
PY - 2018/9
Y1 - 2018/9
N2 - We examine effects of political turmoil on equity return, risk, and corporate governance of politically-connected firms in Egypt. Political strife leads to shifts in the balance of power among different factions. Our analysis shows that equity risk of firms connected to fractions encountering intense political rivalry and public discontent rose, without any compensating increase in return. Political tie that is neutral to regime changes exhibits lower risk. By examining agency-cost measures in different regimes, we find that political instability may exert disciplinary effects on connected shareholders’ behavior. In our sample, expropriation in the connected firms became subdued during Egypt's unrest.
AB - We examine effects of political turmoil on equity return, risk, and corporate governance of politically-connected firms in Egypt. Political strife leads to shifts in the balance of power among different factions. Our analysis shows that equity risk of firms connected to fractions encountering intense political rivalry and public discontent rose, without any compensating increase in return. Political tie that is neutral to regime changes exhibits lower risk. By examining agency-cost measures in different regimes, we find that political instability may exert disciplinary effects on connected shareholders’ behavior. In our sample, expropriation in the connected firms became subdued during Egypt's unrest.
KW - Expropriation
KW - Liability
KW - Political connection
KW - Political turmoil
KW - Risk
UR - http://www.scopus.com/inward/record.url?scp=85045305635&partnerID=8YFLogxK
U2 - 10.1016/j.ememar.2018.03.005
DO - 10.1016/j.ememar.2018.03.005
M3 - Article
AN - SCOPUS:85045305635
SN - 1566-0141
VL - 36
SP - 79
EP - 94
JO - Emerging Markets Review
JF - Emerging Markets Review
ER -
