The impact of managerial political ties on corporate governance and debt financing: Evidence from Ghana

Liedong, T. A. and Rajwani, T. (2017) The impact of managerial political ties on corporate governance and debt financing: Evidence from Ghana Long Range Planning, 51 (5). pp. 666-679.

Preview

Text 1-s2.0-S0024630116301625-main.pdf - Accepted version Manuscript Download (416kB) | Preview

Abstract

In this study, we draw upon insights from agency theory to examine the impact of managerial political ties on cost of debt and also to explore whether corporate governance mediates this impact. We hypothesize that political ties reduce financial reporting quality, disclosure of non-financial information and board independence, and are therefore associated with higher interest rates. We also hypothesize that the negative effect of political ties on the cost of debt will be stronger if firms borrow from privately-owned banks versus government-owned banks. Using data from Ghana, we find support for our direct and moderation hypotheses; political ties are associated with high interest rates and poor corporate governance. However, we do not find evidence of mediation. Altogether, the findings reveal the dark side of political connections and highlight the cost of political embeddedness in emerging credit markets.

Item Type:	Article
Divisions :	Faculty of Arts and Social Sciences > Surrey Business School
Authors :	Name Email ORCID Liedong, T. A. Rajwani, T. t.rajwani@surrey.ac.uk
Date :	12 July 2017
DOI :	10.1016/j.lrp.2017.06.006
Copyright Disclaimer :	© 2017 Elsevier Ltd. All rights reserved.
Uncontrolled Keywords :	Corporate governance; Cost of debt; Ghana; Mediation; Political ties
Depositing User :	Diane Maxfield
Date Deposited :	04 Mar 2019 12:00
Last Modified :	17 Oct 2019 08:35
URI:	http://epubs.surrey.ac.uk/id/eprint/850628

Actions (login required)

View Item

Downloads