Revolving doors: are they valued in the Spanish stock market?
Academia Revista Latinoamericana de Administración
ISSN: 1012-8255
Article publication date: 6 June 2016
Abstract
Purpose
The purpose of this paper is to examine the effect of political connections in the value of companies listed on the Spanish stock market.
Design/methodology/approach
The authors study two issues on this topic: the impact on the company value of the appointment as director of an ex-politician through an event study; and the long run stock market performance of companies with political connections. The authors employ a sample of listed firms in the Spanish stock market for which the authors collected data about their political connections. The authors perform the study during a wide period (1996-2011), comprising four legislatures.
Findings
The results show that from the market perspective the value ex-politicians bring to the company outweigh their costs, especially in times of crisis or economic recession.
Originality/value
Given the concern of regulators and legislators to increase transparency and good governance of companies, this paper shed light on the role that politicians play on the company boards and and their contribution to their value.
Propósito
Nuestro objetivo es estudiar el impacto en el valor de las empresas cotizadas en el mercado bursátil español del nombramiento como consejero de un ex-político, y la valoración que el mercado realiza de la existencia de conexiones políticas en las empresas.
Diseño/metodología
Para los años 1996-2011 analizamos el impacto en el valor de la empresa del nombramiento de un político como consejero. Para ello empleamos la metodología del event study en el corto plazo y a través del rendimiento de las carteras estudiamos si estas empresas obtienen rendimientos anormales a largo plazo.
Resultados
Nuestros resultados muestran que desde la perspectiva de mercado el valor que aportan las conexiones políticas supera sus costes, especialmente en momentos de crisis o desaceleración económica.
Originalidad/valor
Dada la preocupación de los reguladores y legisladores por aumentar la transparencia y los códigos de buen gobierno de las empresas, este trabajo ayuda a entender el papel que los políticos juegan en los consejos de administración de las empresas.
Keywords
Acknowledgements
Acknowledgement
The authors wish to thank the useful comments and suggestions from participants in the XXVIII AEDEM Annual Meeting, Trujillo, 2014, where a previous version of this study was presented, as well as the financial support of the Cátedra de Finanzas Internacionales-Banco Santander. The authors acknowledge the valuable comments and suggestions made by the anonymous referees of the review. All remaining mistakes are the authors own.
Citation
Farinós Viñas, J.E., García Martin, C.J., Herrero Piqueras, B. and Ibáñez Escribano, A.M. (2016), "Revolving doors: are they valued in the Spanish stock market?", Academia Revista Latinoamericana de Administración, Vol. 29 No. 2, pp. 147-164. https://doi.org/10.1108/ARLA-07-2015-0172
Publisher
:Emerald Group Publishing Limited
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