THE EFFECT OF CRONYISM ON DEBT ACCESS: THE CASE OF TUNISIAN LISTED FIRMS

Download This Article

Fayrouz Bencheikh, Neila Boulila Taktak

DOI:10.22495/cocv14i4art6

Abstract

The objective of this paper is to study the effect of cronyism on debt access. Cronyism is concretized by two factors: regulation and political connections. The study is carried out on a sample of Tunisian firms for the period between 2006-2013. First, we test the effect of regulation and political connections on debt access by proceeding with a multiple linear regression model. Results show that regulation is positively associated with the debt ratio. However political connections do not increase the debt ratio. Then, we applied a difference-in-difference model to take account of the natural experiment of the political uprising. The effect of cronyism is confirmed only before this event.

Keywords: Debt Access, Regulation, Political Connections, Cronyism, Political Uprising

Received: 10.02.2017

Accepted: 18.04.2017

How to cite this paper: Bencheikh, F., & Taktak, N. B. (2017). The effect of cronyism on debt access: The case of Tunisian listed firms. Corporate Ownership & Control, 14(4), 77-84. http://doi.org/10.22495/cocv14i4art6