Title: Characteristics of politically connected firms in Indonesia
Authors: Iman Harymawan, Dian Agustia, Ardyan Kusuma Agung
Affiliations: Department of Accountancy, Faculty of Economics and Business, Universitas Airlangga , Indonesia
Publisher: Problems and Perspectives in Management Business Perspectives
Abstract
This study investigates the types and characteristics of firms with politically connected directors in the boards of the company. The study uses data from all firms listed in Indonesia Stock Exchange spanning from 2004 to 2006. This study employs univariate analyzes to address the research questions. The findings show that firms with political connections are prevalent in chemical, infrastructure, investment, and miscellaneous industries. Furthermore, firm size is the only variable which significantly influences the probability of being politically connected firms. Specifically, larger firms are more likely to be politically connected. This study implies that the size of the firms is an important determinant in establishing political connections in Indonesia.
Keywords: rent seeking, political economy, industry studies, firm size, value of the firms
