The influence of political connections over the Portuguese stock Index

Abstract

This thesis explores whether political connections are a relevant issue in the corporate environment in Portugal. We use a hand-collected data set of executive boards of listed firms from EuroNext Lisbon Stock Exchange to identify the companies that appointed former politicians for their top corporate positions. The analysis shows that these politically connected firms have significantly easier access to financing at better conditions, as well as significantly more aggressive hiring policies. We also confirm a decrease in Market Capitalization of political connected firms, a year after the entrance of a former politician, in accordance to Cabo (2012) who first identified this decrease in a small window event study. We explored several characteristics among the political connections to get a finer description of the links between the political and the corporate world in Portugal.

Date of Award	13 Feb 2013
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Ricardo Reis (Supervisor)