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董事及高階主管政治連結與公司績效之關聯性
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2. Design/Methodology/Approach
Our sample includes publicly-traded companies in Taiwan during fiscal years 2005–
2011. In contrast with prior studies, we enlarge the scope of political connections to include
the board of directors in addition to large shareholders and top management. More
specifically, we adopt two definitions of political connections: (1)
POLITICAL_TOPMGT
,
which follows Faccio (2006) to define a firm as “politically connected” if one of the firm’s
large shareholders (at least 10% ownership) or top executives (CEO, president, or vice-
president) is a member of parliament, an officer of central government, or is closely related
to a politician or party; (2)
POLITICAL_BOARD
, which defines a firm as “politically
connected” if one of the firm’s directors has served positions related to the parliament,
central government, or political parties. Both definitions consider past and current
connections.
We use two measures of firm performance: Tobin’s Q (
TQ
) as a measure of market
performance and the return on equity (
ROE
) as a measure of accounting performance. Since
these effects of political connections on firm performance may not be contemporary, the two
performance measures are computed using the next-year value. After controlling political
donations (
DONATION
), leverage (
FR
), firm size (
SIZE
), advertising, and R&D
expenditures (
ADRD
), sales growth (
GROWTH
), and changes in corporate governance
(
CGIUP
), the main empirical models are as follows:
TQ
i,t
+1
=
α
0
+
α
1
POLITICAL_TOPMGT
i,t
(
POLITICAL_BOARD
i,t
) +
α
2
DONATION
i,t
+
α
3
FR
i,t
+
α
4
SIZE
i,t
+
α
5
ADRD
i,t
+
α
6
GROWTH
i,t
+
α
7
CGIUP
+
ε
it
(1)
ROE
i,t
+1
=
β
0
+
β
1
POLITICAL_TOPMGT
i,t
(
POLITICAL_BOARD
i,t
) +
β
2
DONATION
i,t
+
β
3
FR
i,t
+
β
4
SIZE
i,t
+
β
5
ADRD
i,t
+
β
6
GROWTH
i,t
+
β
7
CGIUP
+
ε
it
(2)
3. Findings
The main empirical results of this study support the “grabbing hand” argument that
politically-connected firms exhibit weaker accounting and market performance. To enrich
our analysis as well as ensure the robustness of the results, we perform several additional
tests. First, we calculate the number of politically-connected directors as a percentage of the
board, and separate the different types of political connections. The results indicate that firms