Skip to main page content
U.S. flag

An official website of the United States government

Dot gov

The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Access keys NCBI Homepage MyNCBI Homepage Main Content Main Navigation
. 2023 Mar:224:110999.
doi: 10.1016/j.econlet.2023.110999. Epub 2023 Feb 4.

The role of political connections in bad times: Evidence from the COVID-19 pandemic

Hengxu Liu  1 , Wenxi Zhao  2
Affiliations

The role of political connections in bad times: Evidence from the COVID-19 pandemic

Hengxu Liu et al. Econ Lett. 2023 Mar.

Abstract

This study investigates the relationship between political connections and firm financial performance during the COVID-19 pandemic. Using a difference-in-differences methodology, we found that politically connected enterprises paid more taxes, employed more employees, and suffered financial performance. This study enriches the literature on the impact of COVID-19 on enterprises and provides suggestions for regulators.

Keywords: COVID-19; Corporate governance; Firm financial performance; Political connections.

PubMed Disclaimer

Conflict of interest statement

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Figures

Fig. 1
Fig. 1
Parallel trend test.
See this image and copyright information in PMC

References

    1. Amore M.D., Bennedsen M. The value of local political connections in a low-corruption environment. J. Financ. Econ. 2013;110:387–402.
    1. Brogaard J., Denes M., Duchin R. Political influence and the renegotiation of government contracts. Rev. Financ. Stud. 2021;34:3095–3137.
    1. Edin M. State capacity and local agent control in China: CCP cadre management from a township perspective. China Q. 2003;173:35–52.
    1. Faccio M. Politically connected firms. Am. Econ. Rev. 2006;96:369–386.
    1. Fahlenbrach R., Rageth K., Stulz R.M. How valuable is financial flexibility when revenue stops? Evidence from the COVID-19 crisis. Rev. Financ. Stud. 2021;34:5474–5521.