Does political connection and family business create or destroy firm performance: lesson learnt from Malaysia / Fazrul Hanim Abd Sata … [et al.]

Abd Sata, Fazrul Hanim and Azmi, Nurul Azlin and Sukar, Muhamad Ashaari and Mohd Suffian, Mohd Taufik and Yendrawati, Reni and Zakaria, Nor Balkish (2023) Does political connection and family business create or destroy firm performance: lesson learnt from Malaysia / Fazrul Hanim Abd Sata … [et al.]. Asia-Pacific Management Accounting Journal (APMAJ), 18 (1): 6. pp. 131-153. ISSN 2550-1631


This study examined the effect of the family business on firm performance and whether the political connection moderates these relationships. Final sample consisted of 1,969 firm-year observations from 2013 - 2017. Family characteristics and political connections data were hand-collected from annual report and financial data were extracted from Eikon Datastream. We found that family chairmanship and high family ownership concentration can destroy firm performance, exhibited by low Tobin Q. However, the moderating effect of political connection between family business and firm performance showed a positive and significant association. This implies that politicians in the family firm can create firm performance as they can work as external watchdogs. Additional analysis showed that political connections in high family ownership can destroy firm performance. These findings provide practical implications for regulators and investors that they should be mindful of the designation of family members and appointment of politicians in firms as it may create agency costs and destroy firm performance. This study adds to the limited, albeit important evidence on
the joint effect of politically connected firms and family businesses on firm performance.


Item Type: Article
Email / ID Num.
Abd Sata, Fazrul Hanim
Azmi, Nurul Azlin
Sukar, Muhamad Ashaari
Mohd Suffian, Mohd Taufik
Yendrawati, Reni
Zakaria, Nor Balkish
Subjects: H Social Sciences > HD Industries. Land use. Labor > Management. Industrial Management > Family-owned business enterprises
H Social Sciences > HF Commerce > Business
Divisions: Universiti Teknologi MARA, Shah Alam > Accounting Research Institute (ARI)
Journal or Publication Title: Asia-Pacific Management Accounting Journal (APMAJ)
UiTM Journal Collections: UiTM Journal > Asia-Pacific Management Accounting Journal (APMAJ)
ISSN: 2550-1631
Volume: 18
Number: 1
Page Range: pp. 131-153
Keywords: Family business, political connection, firm performance
Date: April 2023
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