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Political connection and leverage: Some Malaysian evidence

Bliss, Mark A. and Gul, Ferdinand A. 2012, Political connection and leverage: Some Malaysian evidence, Journal of banking and finance, vol. 36, no. 8, pp. 2344-2350, doi: 10.1016/j.jbankfin.2012.04.012.

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Title Political connection and leverage: Some Malaysian evidence
Author(s) Bliss, Mark A.
Gul, Ferdinand A.
Journal name Journal of banking and finance
Volume number 36
Issue number 8
Start page 2344
End page 2350
Total pages 7
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2012-08-01
ISSN 0378-4266
1872-6372
Keyword(s) Social Sciences
Business, Finance
Economics
Business & Economics
Capital structure
Leverage ratio
Political connection
Market-to-book-ratio
CRONYISM
Summary This paper extends prior work on the linkage between politically connected (PCON) firms and capital structure in developing countries. Specifically, this paper focuses on the association between Malaysian PCON firms and leverage, and is motivated by the results of Fraser et al. (2006) who report a positive association between leverage and political patronage. Controlling for a potential misspecification in that paper, this study documents that a significant proportion (almost 12%) of the Malaysian PCON firms have negative equity, and builds on the previous paper by providing fresh evidence that market to book ratio is positively associated with leverage, and that borrowing PCON firms have significantly lower ROA compared to non-PCON firms. © 2012.
Language eng
DOI 10.1016/j.jbankfin.2012.04.012
Field of Research 150103 Financial Accounting
0102 Applied Mathematics
1502 Banking, Finance And Investment
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2012, Elsevier
Persistent URL http://hdl.handle.net/10536/DRO/DU:30080010

Document type: Journal Article
Collection: Department of Management
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