The Effect of Board of Directors Political Connections on Company Efficiency

Political connections play a significant role in corporate governance and have a significant impact on investment and strategic decisions. On the one hand, through political connections, a company can mitigate political risks and gain access to important resources. On the other hand, directors with political experience may be linked to government or politicians who are powerful stakeholders and thus can impose their interests and thereby cause agency conflicts. Studies based on the influence of political connections have been conducted for many years, but there is a dearth of studies focusing on Russian companies. This paper examines the impact of political connections on the performance of Russian companies. The raw data provided by IDLab was collected from various sources and is based on a database from 2008 to 2020 and financial statements from the SPARK system. Least squares method, fixed effects regression model and joint effects model were applied to test the hypotheses. Based on the results of the study, conclusions can be drawn regarding the nature of the impact of political connections on the efficiency of Russian companies.