دانلود رایگان مقاله انگلیسی ارتباطات سیاسی، شرکت های خانوادگی و کیفیت درآمد ها - امرالد 2018

Abstract

Purpose – This paper aims to investigate the effect of political connections on earnings quality by simultaneously controlling the firm characteristics; to test whether Pakistani firms’ ownership, specifically family ownership, plays a significant role in political connections–earnings quality association; to draw a conclusion about the agency theory in the context of Pakistan. Design/methodology/approach – A quantitative approach was used to examine the influence of political connections and family ownership on the earnings quality of listed firms in Pakistan. The study uses historical data from 238 active non-financial firms listed on the Pakistan Stock Exchange during the period of 2009-2015. The final data set comprises more than 1,600 firm-year observations from ten major non-financial industry classifications. To enhance the robustness of the empirical relationship, the study used several proxies of earnings quality in conjunction with robust regression methods and diagnostic checks. Findings – The present study’s findings are consistent with the findings of the studies on agency theory previous literature, where politically connected firms have significantly lower earnings quality as compared to non-connected firms. The results also indicate that family firms have superior earnings quality than non-family–controlled firms. Furthermore, family ownership moderates the negative influence of political connections on earnings quality. This implies that family ownership diminishes the costs of political connections and improves the earnings quality of the firm. Originality/value – This study is different from previous research in three respects. First, it examines whether family ownership concentration has a moderating influence on the relationship between political connections and earnings quality. Second, it uses a robust methodology and extensive data set to examine the influence of political connections and family ownership concentration on earnings quality. Further, this study is the first to analyze the nexus between financial reporting quality and the political business environment in the context of Pakistan.

5. Conclusion

Consistent with agency theory and previous literature, the study finds that politically connected firms have significantly lower earnings quality as compared to non-connected firms (Al-Dhamari and Ismail, 2015; Chaney et al., 2011; Ramanna and Roychowdhury, 2010). The results also indicate that family firms have superior earnings quality than non-familycontrolled firms. Moreover, the study finds that family ownership moderates the negative influence of political connections on earnings quality. This implies that family ownership diminishes the costs of political connections and improves the earnings quality of the firm. The study has implications for policy-makers and regulatory bodies in Pakistan, notably the SECP. Considering the negative effects of political influence on financial reporting quality, the SECP should require that listed firms shall not have direct or indirect links with politicians and declare the same in their statement of compliance. In addition, to further the interests of minority shareholders in firms with family ownership concentration, the SECP should make it mandatory for listed firms to appoint directors that exclusively represent minority shareholders on the board. On the academic front, the study forms a basis for further research on political connections, family ownership and earnings quality. It also underscores the importance of ownership concentration and firm-specific characteristics in explaining the financial reporting quality of listed firms in developing countries. While political connections and family ownership is a common phenomenon in most developing countries, the findings of the study cannot be easily generalized in other contexts because of differences in the regulatory environment and other country specific factors. Future research can examine the influence of political connections and family ownership on earnings quality in a cross-country setting. This will allow us to consider the role of culture and other countryspecific factors in determining earnings quality. Likewise, future research may also examine the relationships investigated in the study by using other proxies for earnings quality such as restatements, working capital accruals, conservatism, value relevance of earnings and earnings response coefficients.