Political connections, dividend and stock return in listed firms on Tehran Stock Exchange

Subject Areas : Financial Knowledge of Securities Analysis

Ferydoon Rahnamay Roodposhti ¹ (Professor, Department of Accounting, Science and Research branch, Islamic Azad University, Tehran, Iran)
Abdolreza Mohseni ² (Assistant Prof., Department of Accounting, Bushehr branch, Islamic Azad University, Bushehr, Iran)

Received: 2017-06-04 Accepted : 2017-09-08 Published : 2018-06-22

Keywords: Political connections, dividend, Stock Return,

Abstract :

Government intervention and existence of politicians on boards may affect companies’ decision making and business trajectory. This study is aimed to investigate of the relationship between political connections, and dividend and stock return in listed firms on Tehran Stock Exchange. This research in terms of purpose is functional and in terms of method is descriptive - correlation. The sample consists of 114 companies listed on Tehran Stock Exchange for the period 2009 to 2016. Correlation and multiple linear regression analysis for hypothesis test are used.The findings show a significant positive association between political connections and dividend. In other words, by increasing political connections on firms, their dividend is increased. In addition, there is a significant positive relationship between political connections and stock return. In other words, by increasing political connections on firms, stock return is increased. These results suggest that political connectedness could represent an important determinant of dividend and stock returns

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