Investigating the Evolution of Political Risk on the Performance of Listed Companies in Financing

Subject Areas : Role of accounting in contracts and in the political process

mohammad khousheh gol garousi ¹ , علی بیات ² , ali mohammadi ³

1 - Student at Azad University, Zanjan Branch
2 - گروه حسابداری، واحد زنجان، دانشگاه آزاد اسلامی، زنجان، ایران.
3 - Department of Accounting, Zanjan Branch, Islamic Azad University, Zanjan, Iran

Received: 2025-03-10 Accepted : 2025-06-01 Published : 2025-06-21

Keywords: Political Risk, Political Uncertainty, Debt Financing, Equity Financing,

Abstract :

A major challenge in financial research is understanding the financial decisions of companies. Financing decisions are influenced by various systematic and unsystematic risks. Therefore, the aim of this research is to examine the impact of political risk on the financing performance of listed companies. This study is applied and quantitative in nature. The statistical population consists of all companies listed on the Tehran Stock Exchange, with 89 companies selected for analysis through systematic elimination. The study period is from 2006 to 2021. The data for this research is based on actual stock market information and audited financial statements of companies listed on the Tehran Stock Exchange, as well as data from the Tehran Stock Exchange’s website and the Codal platform. The findings showed that with 95% confidence, there is a significant relationship between political risk and the financing decisions of companies. Political risk has a significant impact on corporate financing through debt at a 95% confidence level. Additionally, political risk has a positive and significant effect on corporate financing through equity. The results indicate that political risk developments can directly affect the ability of listed companies to raise capital. Political risk can significantly increase borrowing costs. Moreover, this risk has a positive impact on equity financing, as investors may seek investment opportunities a with higher returns in unstable conditions

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