Political connection and leverage: Some Malaysian evidence

Mark Anthony Gerard Bliss, Ferdinand A. Gul

Research output: Journal article publicationJournal articleAcademic researchpeer-review

73 Citations (Scopus)


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.
Original languageEnglish
Pages (from-to)2344-2350
Number of pages7
JournalJournal of Banking and Finance
Issue number8
Publication statusPublished - 1 Aug 2012


  • Capital structure
  • Leverage ratio
  • Market-to-book ratio
  • Political connection

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance


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