921
This could be done through matching the good and bad news to the two groups of firms. If both the good
and bad news of the politically connected firms yield similar market reaction, we could infer that the
quality of earnings does not reflect the firms’ stock prices.
Conclusions and Suggestion
This thesis established several findings of the relationship between politics and finance by looking
at the connection between the politics and the listed firms. The aspect of the quality of earnings
information was focused in this study for the other approaches in studying the benefits of political
connection have contributed mainly on the stock returns and other ratios on the benefits. On average, the
political connections did not give extra benefits in the aspect of the ability to have lower quality of
earnings information to the connected firms. However, the connected and non-connected firms were found
to gain different market reaction on earnings announcement.
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