Political connections and stock price crash risk: Empirical evidence from the fall of Suharto

Artikel

This study examines the relationship between firm-level political connections and stock price crash risk in Indonesia. It employs the difference-in-difference design to deal with the self-selection bias issue regarding the choice of the firms to become a politically connected firm. We use the sudden resignation of the former President of Indonesia, Suharto, to show that politically connected firms are associated with lower stock price crash risk and that the risk for these politically connected firms increased after Suharto resigned. Furthermore, we found evidence that these negative associations are more pronounced in firms with more complex firm structures.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: International Journal of Financial Studies ; ISSN: 2227-7072 ; Volume: 7 ; Year: 2019 ; Issue: 3 ; Pages: 1-16 ; Basel: MDPI

Classification and Topics

• Classification: Wirtschaft ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; General Financial Markets: General (includes Measurement and Data) ; Market Structure, Firm Strategy, and Market Performance: General
• Subject: complex firm structure ; politically connected firms ; stock price crash risk

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Harymawan, Iman ; Lam, Brian ; Nasih, Mohammad ; Rumayya, Rumayya
• Event: Veröffentlichung
• (who): MDPI
• (where): Basel
• (when): 2019

Further information

• DOI: doi:10.3390/ijfs7030049
• Handle: http://hdl.handle.net/10419/257647
• Last update: 10.03.2025, 11:43 AM CET