Political Connections and Related Party in Companies Listed on the Tehran Stock Exchange: Examination and Analysis

Abstract

Political connection is a notion used to express the close relationship between government and business entities. Enjoying political connections can result in benefits ranging from favorable borrowing conditions to reduced financial costs, improved growth opportunities, and a reduced likelihood of bankruptcy. Political companies can employ related party transactions to fulfill their operational and financial reporting purposes. In this study, the relationship between political connection and related party transactions in companies listed on the Tehran Stock Exchange was examined. The present study is applied research that employs descriptive and correlational methods for data collection. The statistical population of this research includes all companies listed on the Tehran Stock Exchange in a period of 6 years based on the financial statements from Persian years corresponding to 2011-2016. Based on the systematic elimination method, a total of 100 companies were selected as the final statistical sample of the research. Excel was used to arrange and prepare the data, on which various tests were performed using Eviews software. The results of examining the hypotheses using the data panel regression method indicate that there is a significant relationship between the political connection of the company and related party transactions.