The Political Connections and Firm Performance on Global Fortune 500 Oil and Gas Companies

  • Nur Farrahanie Ahmad Tarmizi Universiti Malaysia Sarawak (UNIMAS), Jln Datuk Mohammad Musa, 94300 Kota Samarahan, Sarawak, Malaysia.
  • Rayenda Khresna Brahmana University of Bahrain, P.O. Box 32038, Sakhir, Kingdom of Bahrain.
Keywords: Political connections, High performing industries, Firm performance, Financial stake


The purpose of this research is to highlight the significance of the paradox of corporate political ties on business performance. Corporate - political affairs are said to provide a resource-based and competitive advantage in a wide range of industries. Effect through corporate boards of directors has been discovered in many high-performing industries, and it is believed to be economically beneficial to the country. Previously, political affiliations were always used as an independent variable to explore their relationship with business indicators such as company performance, corporate actions, and exclusive rights. In this study, we used 152 data from the Fortune Global 500 between 2012 to 2017 to determine the impact of politics on company success in a particular industry; oil and gas. According to the relationship hypothesis, strong political connections are more likely to have a favourable impact on business outgoing.


Download data is not yet available.


Agrawal, A., & Knoeber, C. R. (2001). Do some outside directors play a political role? Journal of Law & Economics, 44(1), 179–198.

Ahmad Tarmizi, N. F., & Brahmana, R. K. (2022). Cozy Politics on Environmental and Financial Performance : Evidence from Oil and Gas companies. Malaysian Journal of Social Sciences and Humanities, 7(6), 17.

Amara, I. (2020). A review of the influence of political connections on management’s decision in non-US settings. Journal of Financial Reporting and Accounting, 18(4), 687-705

Ang, J. S., Ding, D. K., & Thong, T. Y. (2013). Political connection and firm value. Asian Development Review, 30(2), 131–166.

Arifin, T., Hasan, I., & Kabir, R. (2020). Transactional and relational approaches to political connections and the cost of debt. Journal of Corporate Finance, 65, 101768.

Azmi, N. A., Zakaria, N. B., Hanim, F., Sata, A., & Sanusi, Z. M. (2020). Political Connection and Firm ’s Performance Among Malaysian Firms, 11(3), 146–154.

Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99–120.

Bertrand, M., Kramarz, F., Schoar, A., & Thesmar, D. (2007). Politicians, firms and the political business cycle: Evidence from France. In working paper.

Boubakri, N., Cosset, J.-C., & Saffar, W. (2012). The impact of political connections on firms’ operating performance and financing decisions. The Journal of Financial Research, 35(3), 397–423.

Boubakri, N., Cosset, J. C., & Saffar, W. (2008). Political connections of newly privatized firms. Journal of Corporate Finance, 14(5), 654–673.

Bunkanwanicha, P., & Wiwattanakantang, Y. (2009). Big business owners in politics. Review of Financial Studies, 22(6), 2133–2168.

Chen, Y. C. Hung, M., & Wang, Y. (2018). The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from China. Journal of Accounting and Economics, 65(1), 169–190.

Cheney, P. K., Faccio, M., & Parsley, D. (2011). The quality of accounting information in politically connected firms. Journal of Accounting and Economics, 51(1–2), 58–76.

Ding, S., Jia, C., Wu, Z., & Zhang, X. (2014). Executive political connections and firm performance: Comparative evidence from privately-controlled and state-owned enterprises. International Review of Financial Analysis, 36, 153–167.

Faccio, M. (2006). Politically Connected Firms. American Economic Review, 96(1), 369–386.

Faccio, M. (2010). Differences between Politically Connected and Non-Connected Firms : A Cross Country Analysis Differences between Politically Connected and Non-Connected Firms : A Cross Country Analysis. Financial Management, 39(3), 905–927.

Fan, J. P. H., Rui, O. M., & Zhao, M. (2008). Public governance and corporate finance: Evidence from corruption cases. Journal of Comparative Economics, 36(3), 343–364.

Fisman, R. (2001). Estimating the Value of Political Connections. American Economic Review, 91(4), 1095–1102.

Fisman, R., Galef, J., Khurana, R., & Wang, Y. (2012). Estimating the Value of Connections to Vice-President Cheney. The B.E. Journal of Economic Analysis & Policy, 12(3).

Foo, V., Rahimie, M., & Karim, A. (2015). Capital Structure and Corporate Performance : Panel Evidence from Oil and Gas Companies in Malaysia, 6(6), 371–379.

Guerra Pérez, S., Bona Sánchez, C., & Santana Martín, D. J. (2015). Politically connected firms in Spain. BRQ Business Research Quarterly, 18(4), 230–245.

Hashmi, M. A., Brahmana, R. K., & Lau, E. (2018). Political connections, family firms and earnings quality. Management Research Review, 41(4), 414–432.

Hillman, A. J., Keim, G. D., & Schuler, D. (2004). Corporate political activity: A review and research agenda. Journal of Management, 30(6), 837–857.

Hong, S. H.-W. (2010). Political Connections and Firm Performance : The Case of Hong Kong. Journal of East Asian Studies, 10(2), 275–313.

Houston, J. F., Jiang, L., Lin, C., & Ma, Y. (2014). Political connections and the cost of bank loans. Journal of Accounting Research, 52(1), 193–243.

Johnson, S., & Mitton, T. (2003). Cronyism and capital controls: Evidence from Malaysia. Journal of Financial Economics, 67(2), 351–382.

Khwaja, A. I., & Mian, A. (2005). Do Lenders Favor Politically Connected Firms ? Rent Provision in an Emerging Financial Market. The Quarterly Journal of Economics, 120(4), 1371–1411.

Kim, C. F., & Zhang, L. (2016). Corporate Political Connections and Tax Aggressiveness. SSRN Electronic Journal.

Kogan, T. B., & Salganik, S. G. (2015). Corporate governments: Government connections of public oil and gas companies. In Corporate Ownership and Control (Vol. 12).

Li, H., Meng, L., Wang, Q., & Zhou, L. A. (2008). Political connections, financing and firm performance: Evidence from Chinese private firms. Journal of Development Economics, 87(2), 283–299.

Mitchell, H., & Joseph, S. (2010). Changes in Malaysia: Capital controls, prime ministers and political connections. Pacific Basin Finance Journal, 18(5), 460-476.

Najaf, R. (2021). Political ties and corporate performance : why efficiency matters ? Journal of Business and Socio-Economic Development, 1(2), 182–196.

Osazuwa, N. P. (2016). Political Connection, Board Characteristics and Firm Performance in Nigeria. International Soft Science Conference, 769–774.

Petersen, M. A. (2011). Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches. SSRN Electronic Journal.

Prado-Lorenzo, J. M., Rodrıguez-Domınguez, Lvarez, L. G.-A., Isabel, & Garcıa-Sanchez, I.-M. (2009). Factors influencing the disclosure of greenhouse gas emissions in companies world-wide. 47(7), 1133–1157.

Ross, M. L. (2003). A paper prepared for the UK Department for International Development "Nigeria: Drivers of Change program. Nigeria’S Oil Sector and the Poor, 1–27.

Saeed, A., Belghitar, Y., & Clark, E. (2019). Political connections and corporate performance: Evidence from Pakistan. Economics of Transition and Institutional Change, 27(4), 863–889.

Sapienza, P. (2004). The effects of government ownership on bank lending. Journal of Financial Economics, 72(2), 357–384.

Tsai, L. C., Zhang, R., & Zhao, C. (2019). Political connections, network centrality and firm innovation. Finance Research Letters, 28, 180–184.

Wong, W.-Y., & Hooy, C.-W. (2018). Do types of political connection affect firm performance differently? Pacific-Basin Finance Journal, 51, 297–317.

Yu, X., Yao, Y., Zheng, H., & Zhang, L. (2020). The role of political connection on overinvestment of Chinese energy firms. Energy Economics, 85, 104516.

How to Cite
Ahmad Tarmizi, N. F. and Brahmana, R. (2022) “The Political Connections and Firm Performance on Global Fortune 500 Oil and Gas Companies”, Malaysian Journal of Social Sciences and Humanities (MJSSH), 7(7), p. e001622. doi: 10.47405/mjssh.v7i7.1622.