The value of political connections in a multiparty parliamentary democracy: Evidence from the 2015 elections in Israel

Lehrer, Nimrod David

doi:10.1016/j.ejpoleco.2017.07.001

Cited by 10 publications

(8 citation statements)

References 41 publications

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“…Secondly, Akitoby and Stratmann (2010), asserts that financial markets value elections negatively as opposed to Agyei-Sasu and Anaman (2012), who observed that ROE increased in an election year. Such contradictions in empirical findings seem to lend credence to the view that, the impact of election year on firm's performance is countryspecific, based on the prevailing institutional and political system (Lehrer, 2018). Finally, the motivation for this study is also rooted in the fact that, it is focused on the impact of election year on the performance of the financial sector in Ghana.…”

Section: Theoretical Underpinning and Literature Reviewmentioning

confidence: 88%

“…Additionally, they observed that contributing firms had more bank financing after the elections compared to the firms that did not contribute. On the contrary, Lehrer (2018) observed that political connections had little impact on cumulative abnormal returns, when he researched on 413 firms listed on the Tel Aviv stock exchange, in the week of the 2015 elections. Though he admits that some specific sectors responded significantly to the election outcome, he concludes that the market's lack of responsiveness to political connections after the 2015 elections could indicate that, political connections do not carry financial value in the Israeli stock market.…”

Section: Theoretical Underpinning and Literature Reviewmentioning

confidence: 99%

“…This work is motivated firstly by the controversies prevailing both in theory and empirical studies, and hence requiring further inquiry into the relationship between an election year and firm performance. Secondly, this paper is inspired by the work of Lehrer (2018) who suggests that the impact of elections on firm performance is country-specific, depending largely on the state of institutional and political systems in place. Most importantly, when two banks (Capital bank and UT bank) collapse some few months after the 2016 major elections in Ghana (Osabutey, 2017), the most likely suspect for such a calamity would be no any other factor, then manipulations of incumbency, or the inaction of the government.…”

Section: Introductionmentioning

confidence: 99%

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Should banks be averse to elections? A GMM analysis of recent elections in Ghana

Broni

Hosen

Mohammed

et al. 2019

JEFAS

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Purpose Actions of incumbent politicians and firms’ managers during election years have been cited as sources of many problems that afflict economies and business entities. Given the controversies surrounding the impact of elections on firms’ soundness, this paper poses a question of whether banks should be averse to elections. Specifically, this study aims to investigate the impact of elections on the profitability and efficiency of banks. Design/methodology/approach Based on the authors’ knowledge, this is maiden analysis in this context for Ghana where relatively advanced appropriate GMM technique has been used on annual data from 2012 to 2016. Findings This study reveals that banks make higher returns in election years. Additionally, the authors report that government’s economic policies in election years are detrimental to management efficiency, though insignificant. Practical implications From an emerging economy perspective, this study would guide policymakers in designing policies that respond to, or minimize, the impact of elections on bank performance. The result of this analysis would also substantiate the market reaction to the changes in the economic, political and financial conditions. Originality/value This analysis suggests that firms’ performances in an election year depend on policies and political institutions in place. The authors argue that Ghana, with its exemplary democratic credentials and strong institutions, living alongside a high perception of corruption, is different. The contribution to literature is, first, by limiting this work to the banking sector of Ghana and, second, by incorporating the behaviors of incumbent governments and individuals in the regression specification model.

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Section: Theoretical Underpinning and Literature Reviewmentioning

confidence: 88%

Section: Theoretical Underpinning and Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Should banks be averse to elections? A GMM analysis of recent elections in Ghana

Broni

Hosen

Mohammed

et al. 2019

JEFAS

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“…All of these studies used Cumulative Abnormal Return (CAR) to measure the firm value. While, regression studies aimed to examine the relationship between political connections and firm financial performance or value by considering other explanatory factors (Wang, 2015;Do et al,2015;Chen et al, 2017;Shin et al, 2018;Lehrer, 2018). Overall, it is obvious that there is a huge debate about the relationship between political connections and firm value.…”

Section: Literature Review and Hypotheses Development Political Connections And Firm Valuementioning

confidence: 99%

Examining the Relationship between Political Connections, Related Party Transactions, and Firm Value in Egyptian Listed Companies: Empirical Study

Abdel-Fattah¹,

El-Shayeb²,

Ameria³

2020

IJARBSS

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The main objective of the current research is to examine the effect of political connections and related party transactions on firm value. Moreover, the moderating role of related party transactions on the relationship between political connections and firm value is investigated. The research sample covers a period of five years from 2014 to 2018, including 33 Egyptian firms listed in the Egyptian Stock Exchange, resulted in 165 firm-year observations. The results show that: first, there is a significant positive relationship between political connections and firm value measured by Tobin's Q. Second, there is a significant positive relationship between related party transactions related to assets including investments with associates and due from related parties and firm value. Third, related party transactions do not moderate the relationship between political connections and firm value as all interaction variables are insignificant.

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“…Buna göre Avustralya federal seçimleriyle ilgili yaşanan politik belirsizliklerin piyasa volatilitesini artırdığı, mevcut durumda görevde olan hükümetin tekrar seçilmesi durumunda volatilitenin azaldığı belirlenmiştir. Lehrer (2018), İsrail'de 2015 yılında yapılan parlamento seçimi sonuçlarının, politik bağlantısı olan firmaların hisse senetleri üzerine etkisi olup olmadığını incelemiştir. Tel Aviv Piyasasında (TASE) yer alan firmaların hisse senedi getirilerinin seçim sonuçlarından nasıl etkilendiği olay analizi metodolojisi yardımıyla analiz edilmiştir.…”

Section: Diğer üLkelerde Gerçekleştirilen Seçimlerin Piyasalar üZerindeki Etkileri Ile Ilgili çAlışmalarunclassified

The Effect of Political Risk on Stock Markets: A Literature Review

Kaya¹,

Kahraman²,

Poyraz³

2020

GJEB

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There are different types of risks that investors should consider. The risk, defined as the "probability of deviation of the expected return from the actual return" in the finance literature, is divided into two groups, systematic and non-systematic risks. The purpose of this article is to examine the studies on how the political risk, which is one of the systemic risks, affects the financial markets, and to present the findings obtained in these studies to the readers. In this context, choices from political risk factors, Brexit Referendum, terrorist incidents, wars and international politic risk index were examined and studies in the local and foreign literature were examined. While determining the studies included in the article, studies investigating the results of the related events on stock markets were preferred. Thus, it is aimed that readers will be able to make a general assessment of political risk in stock markets. According to the results of the research conducted with the literature review method, it was determined that the political risk significantly affected the stock returns, and this effect varied depending on different factors such as the type of the event examined, the level of importance and the structure of the markets investigating the impact.

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The value of political connections in a multiparty parliamentary democracy: Evidence from the 2015 elections in Israel

Cited by 10 publications

References 41 publications

Should banks be averse to elections? A GMM analysis of recent elections in Ghana

Should banks be averse to elections? A GMM analysis of recent elections in Ghana

Examining the Relationship between Political Connections, Related Party Transactions, and Firm Value in Egyptian Listed Companies: Empirical Study

The Effect of Political Risk on Stock Markets: A Literature Review

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