The Effect of Political Influence and Corporate Transparency on Firm Performance： Empirical Evidence From Indonesian Listed Companies

The paper aims to examine the effect of political influence on corporate transparency, and performance of Indonesian listed companies, Seventy-three large public firms from hundred of the largest companies in Indonesia were selected as the sample. Data for corporate transparency are collected from annual reports for the years 2005-2007. Corporate transparency is indexed by the amount of information disclosed in company＇s annual report. The disclosure index reporting model developed in the current research is based on the Annual Report Award （ARA, an award given annually to Indonesian listed and non-listed companies）, and firm performance is measured using two indicators： ROA （return on assets） and Tobin-Q. The political influence variable is proxied by two indicators： government ownership and the existence of politicians in Board of Directors （BOD）. Results demonstrate that contrary to the hypothesis, government ownership （political influence） has positive relation to corporate transparency, as well as to ROA （firm performance）. Results also support the hypothesis that transparency act as a mediating variable for the relationship between political influence and firm performance. However, when political influence is pmxied by existence of politicians in BOD and fm＇n performance proxied by Tobin-Q, data seems to give support to the hypotheses proposed. The discussion and implications of the findings and suggestions for future research arc discussed.

Bank loan information and information asymmetry in the stock market:evidence from China

In this study,we use bank loan information to construct proxies for corporate transparency and examine whether these measures reflect information asymmetry in the stock market.Our analysis is based on a novel dataset of stock transactions and bank loans of all publicly listed firms on the Shenzhen Stock Exchange,covering January 2008 to June 2013.We find that firms with outstanding loans have a lower level of information asymmetry in the stock market,whereas firms with defaulted loans have a higher level of asymmetry.Further evidence demonstrates that the effect of loan default on information asymmetry in the stock market is more pronounced when these loans are borrowed from joint-equity commercial banks or multiple banks and when the default occurs under inactive market conditions.Our results remain robust to a series of endogeneity and sensitivity tests and provide suggestive evidence of a close connection between the credit loan and stock markets.