Political connections and firm performance: evidence from the mobile industry in Indonesia
by Arniati Arniati; An An Chiu; Shaio Yan Huang; Ching-Wen Lin
International Journal of Mobile Communications (IJMC), Vol. 23, No. 1, 2024

Abstract: This study investigates whether political connections in the mobile industry are associated with performance. The mobile industry is a restricted business in Indonesia, where the rules for business entry and business operations are abundant, such as operational licences, tariffs, and implementation policies. The study expects that mobile firms with political connections perform better than those without political connections. The results indicate the different impacts of political connections on firm performance, measured by ROA and Tobin's Q. The study also finds different results in political connections and performances on a family-owned mobile company and a non-family-owned mobile company, including SOE. Moreover, the study investigates different forms of political connections including companies, government or military, politicians, and parliament. The study suggests that the multiple political connection types have different effects on firm performances.

Online publication date: Fri, 22-Dec-2023

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