International Journal of Financial Management and Economics
Vol. 3, Issue 2 (2020)
Political connections and firm performance in non-financial firms listed on Johannesburg stock exchange
Joshua Benson Nadiyasu
This study concerns with how political connections affect firm performance. Extant literature in the subject presented mixed and inconclusive findings. The aim of the study was two fold: to examine the effect of political connections on firm performance and to find out whether or not different types of political connections affect firm performance differently. Fifty (50) firms listed on Johannesburg Stock Exchange (JSE) were used as the sample size of the study based on a study period from 2012 to 2018. A dynamic regression using the GMM estimation technique was used to test the relationship. The results indicate that in general, political connections positively affect firm performance, but not all types of such connections affect firm performance. It was recommended that political connections should be discouraged in non government linked companies because of the instability of such types of connections. Government linked companies on the other hand, should explore other types of political connections in order to enhance performance.
Joshua Benson Nadiyasu. Political connections and firm performance in non-financial firms listed on Johannesburg stock exchange. Int J Finance Manage Econ 2020;3(2):17-23. DOI: 10.33545/26179210.2020.v3.i2.50