Political connections of newly privatized firms

Narjess Boubakri, Jean Claude Cosset, Walid Saffar

Research output: Journal article publicationJournal articleAcademic researchpeer-review

417 Citations (Scopus)


We investigate the extent of political connections in newly privatized firms. Using a sample of 245 privatized firms headquartered in 27 developing and 14 developed countries over the period 1980 to 2002, we find that 87 firms have a politician or an ex-politician on their board of directors. Politically-connected firms are generally incorporated in major cities, are highly leveraged, and operate in regulated sectors. The likelihood of observing political connections in these firms is positively related to government residual ownership, and negatively related to foreign ownership. Political fractionalization and tenure, as well as judicial independence are also key explanatory variables. Finally, politically-connected firms exhibit a poor accounting performance compared to their non-connected counterparts.
Original languageEnglish
Pages (from-to)654-673
Number of pages20
JournalJournal of Corporate Finance
Issue number5
Publication statusPublished - 1 Dec 2008
Externally publishedYes


  • Characteristics
  • Performance
  • Political connection
  • Privatization

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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