The Influence of Political Connections and Government Ownership on Firm Performance: evidence from Russia

With the means of panel data analysis for the period from 2011 to 2014, we investigate the influence of political connections on non-financial Russian listed enterprises. A sample of 106 companies is divided into two sub-samples: politically connected firms (PCF) and firms that do not possess the trait (NCF). The author explores two fundamental issues. How does a politically connected person on the board of directors influence the capital structure and key performance indicators? And, in general, what role do the outside PC-directors play in corporate governance? ROA, ROE and q-Tobin are used as performance measures. We find out the PCFs are more effective than the unrelated firms, although they have the greater amount of money on the accounts. However, it should be noted that the main effect comes from the PC of the federal level. Hypotheses about the positive impact of political connections on the access to debt financing and the negative - on the cost of debt, were not confirmed.