Government power and the value of political connections: Evidence from Covid-19 economic lockdowns

The value of political connection is driven by economic power, rather than the political power of the government per se. We examine this with Malaysia's Covid-19 economic lockdowns where the government gained unprecedented economic power. Changes of 3 governments over 2020-2021 allow us to veri...

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Autores principales: Tee, Chwee-Ming, Wong, Wai-Yan, Hooy, Chee-Wooi
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Elsevier Inc. 2022
Materias:
Article
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9574850/
https://www.ncbi.nlm.nih.gov/pubmed/36276302
http://dx.doi.org/10.1016/j.frl.2022.102706
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author Tee, Chwee-Ming
Wong, Wai-Yan
Hooy, Chee-Wooi
author_facet Tee, Chwee-Ming
Wong, Wai-Yan
Hooy, Chee-Wooi
author_sort Tee, Chwee-Ming
collection PubMed
description The value of political connection is driven by economic power, rather than the political power of the government per se. We examine this with Malaysia's Covid-19 economic lockdowns where the government gained unprecedented economic power. Changes of 3 governments over 2020-2021 allow us to verify whether changes in political power per se creates value. Our event study shows politically connected (PCON) firms outperform non-PCON firms during total economic lockdowns. However, after the easing of restrictions, investors reallocate their investments to non-PCON firms. Lastly, changes in government do not affect the value of PCON firms because there is no election mandate.
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spelling pubmed-95748502022-10-17 Government power and the value of political connections: Evidence from Covid-19 economic lockdowns Tee, Chwee-Ming Wong, Wai-Yan Hooy, Chee-Wooi Financ Res Lett Article The value of political connection is driven by economic power, rather than the political power of the government per se. We examine this with Malaysia's Covid-19 economic lockdowns where the government gained unprecedented economic power. Changes of 3 governments over 2020-2021 allow us to verify whether changes in political power per se creates value. Our event study shows politically connected (PCON) firms outperform non-PCON firms during total economic lockdowns. However, after the easing of restrictions, investors reallocate their investments to non-PCON firms. Lastly, changes in government do not affect the value of PCON firms because there is no election mandate. Elsevier Inc. 2022-06 2022-01-31 /pmc/articles/PMC9574850/ /pubmed/36276302 http://dx.doi.org/10.1016/j.frl.2022.102706 Text en © 2022 Elsevier Inc. All rights reserved. Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource centre is hosted on Elsevier Connect, the company's public news and information website. Elsevier hereby grants permission to make all its COVID-19-related research that is available on the COVID-19 resource centre - including this research content - immediately available in PubMed Central and other publicly funded repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with acknowledgement of the original source. These permissions are granted for free by Elsevier for as long as the COVID-19 resource centre remains active.
spellingShingle Article
Tee, Chwee-Ming
Wong, Wai-Yan
Hooy, Chee-Wooi
Government power and the value of political connections: Evidence from Covid-19 economic lockdowns
title Government power and the value of political connections: Evidence from Covid-19 economic lockdowns
title_full Government power and the value of political connections: Evidence from Covid-19 economic lockdowns
title_fullStr Government power and the value of political connections: Evidence from Covid-19 economic lockdowns
title_full_unstemmed Government power and the value of political connections: Evidence from Covid-19 economic lockdowns
title_short Government power and the value of political connections: Evidence from Covid-19 economic lockdowns
title_sort government power and the value of political connections: evidence from covid-19 economic lockdowns
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9574850/
https://www.ncbi.nlm.nih.gov/pubmed/36276302
http://dx.doi.org/10.1016/j.frl.2022.102706
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