How do corporate political connections influence financial reporting? A synthesis of the literature

Susanne Preuss, Roland Königsgruber

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

A large stream of research has analyzed the effects of corporate political connections (CPCs) on firms, including first evidence on their effects on financial reporting behavior. However, the evidence so far is inconclusive, and attempts to explain the causality of effects on reporting are limited. In this article, we present the results of a systematic review of the literature on CPCs. We draw on findings in the accounting, finance, and economics literature and derive a framework that identifies four channels through which CPCs affect financial reporting. Our review of the literature suggests that effects of political connections tend to be more ambiguous than suggested by individual studies that often offer directional hypotheses. We also identify eight distinct types of political connectedness and discuss their interrelations and the proxies used in the literature to measure them.
Original languageEnglish
Article number106802
Pages (from-to)106802
JournalJournal of Accounting and Public Policy
Volume40
Issue number1
DOIs
Publication statusPublished - Jan 2021

Keywords

  • Corporate political connections
  • Literature review
  • Financial reporting

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