Conference Paper
Politicians on the Boards of Firm Directors in the MENA Countries: Do Connections Affect Confidence in Business Sales?
No.
ERF_31_PE40
Publisher
ERF
Date
March, 2025
Topic
P. Economic Systems
This study examines the relationship between firms’ political connections and their confidence in achieving enhanced future sales. Using firm-level survey data from selected Middle Eastern and North African (MENA) countries, we apply ordered probit regressions to demonstrate that businesses with board members who have political experience in government show increased confidence in anticipating improved sales. This positive association remains robust even after controlling for various determinants of managers’ sentiment. Quantitatively, our results indicate that having a politician on the board increases the predicted probability of a positive change in firm sales expectations by approximately 10 percentage points, while also reducing the predicted probability of no change or a decrease in sales expectations. Furthermore, we identify that membership in business associations serves as an important mediator, facilitating access to information, markets, credit, and lobbying opportunities. The findings also highlight the significance of a well-defined business strategy and firm size as key factors mediating the relationship between firms’ political connections and their confidence in future sales.
Authors
Hassan Gholipour
Associate Professor of Property, School of Business,...
Research Fellows
Mohammad Reza Farzanegan
Professor in Economics of the Middle East,...