Politically connected independent board and firm performance

Figures & data

Table 1. Variable definition

Variables	Names of Variables	Definitions	Data Sources
Politically connected independent commissioner	PCON_BOCI	Independent commissioners who are politically connected are measured using a dummy variable, and the value is 1 if there is a politically connected independent commissioner within the firm and 0 otherwise	Annual report
Politically connected independent directors	PCON_BODI	Independent directors who are politically connected are measured using a dummy variable, and the value is 1 if there is a politically connected independent director within the firm and 0 otherwise.	Annual report
ROA	ROA	The firm’s ability to generate profit from its asset	OSIRIS
Leverage	LEVERAGE	The firm’s ability to finance its resources obtained through debt	OSIRIS
Firm size	LN_TASSET	the number of assets owned by the firm	OSIRIS
Growth	GROWTH	Percentage of change in sales	OSIRIS
Total commissioners	COMSIZE	Total number of commissioners	Annual report
total membership director	DIRSIZE	Number of the board of directors	Annual report
Percentage of independent commissioners	CI_PERSEN	Percentage of an independent commissioner	Annual report
Percentage of independent directors	DI_PERSEN	Percentage of an independent commissioner	Annual report
Political connections of independent commissioners-based on industries	PROBCON_BOCI	Percentage of politically connected independent commissioners of each industrial firm each year	Annual report
Political connections of independent directors based on industries	PROBCON_BODI	Percentage of politically connected independent directors of each industrial firm each year	Annual report

Table 2. Distribution of politically connected independent commissioners

YEAR	PCON_BOCI		Total	% PCON_BOCI
	Connect	N_Connect
2010	148	132	280	52.86
2011	158	158	316	50.00
2012	174	166	340	51.18
2013	196	179	375	52.27
2014	202	183	385	52.47
2015	202	175	377	53.58
2016	202	171	373	54.16
2017	199	176	375	53.07
Total	1,481	1,340	2,821	52.50

Table 3. Distribution of politically connected independent commissioners by industrial firm group (SIC)

SIC	PCON_BOCI		Total	% PCON_BOCI
	Connect	N_Connect
0	66	36	102	64.71
1	257	127	384	66.93
2	308	382	690	44.64
3	179	289	468	38.25
4	250	139	389	64.27
5	122	139	261	46.74
6	170	112	282	60.28
7	104	107	211	49.29
8	25	9	34	73.53
Total	1,481	1,340	2,821	52.50

Table 4. Distribution of politically connected independent directors (PCON_BODI)

YEAR	PCON_BODI		Total	PCON_BODI
	Connect	N_Connect
2010	9	271	280	3.21
2011	9	307	316	2.85
2012	9	331	340	2.65
2013	15	360	375	4.00
2014	25	360	385	6.49
2015	30	347	377	7.96
2016	28	345	373	7.51
2017	24	351	375	6.40
Total	149	2,672	2,821	5.28

Table 5. Distribution of politically connected independent directors based on industrial firm group (SIC)

SIC	PCON_BODI		Total	% PCON_BODI
	Connect	N_Connect
0	11	91	102	10.78
1	45	339	384	11.72
2	15	675	690	2.17
3	31	437	468	6.62
4	32	357	389	8.23
5	5	256	261	1.92
6	3	279	282	1.06
7	6	205	211	2.84
8	1	33	34	2.94
Total	149	2,672	2.821	5.28

Table 6. Descriptive statistics

	Mean	Median	Standard Deviation	Minimum	Maximum
ROA	4.115	3.290	12.657	−130.820	209.230
PCON_BOCI	0.525	1.000	0.499	0.000	1.000
PCON_BODI	0.053	0.000	0.224	0.000	1.000
LEVERAGE	0.552	0.498	0.689	0.000	20.714
LN_TASSET	21.471	21.481	1.723	15.019	26.413
GROWTH	141.179	8.626	3354.806	−1694.476	138,462.570
COMSIZE	4.277	4.000	1.937	1.000	22.000
DIRSIZE	4.727	4.000	1.938	2.000	16.000
CI_PERCEN	37.031	33.333	15.938	0.000	300.000
DI_PERCEN	11.286	0.000	14.189	0.000	100.000

Table 7. Pearson correlation

From Variable Number [1] to Number [5]
		[1]	[2]	[3]	[4]	[5]
[1]	ROA	1.000
[2]	PCON_BOCI	0.057***	1.000
		(0.003)
[3]	PCON_BODI	−0.071***	0.120***	1.000
		(0.000)	(0.000)
[4]	LEVERAGE	−0.268***	0.013	−0.001	1.000
		(0.000)	(0.474)	(0.970)
[5]	LN_TASSET	0.102***	0.392***	0.052***	−0.076***	1.000
		(0.000)	(0.000)	(0.006)	(0.000)
From Variable Number [6] to Number [10]
[6]	GROWTH	1.000
[7]	COMSIZE	−0.011	1.000
		(0.557)
[8]	DIRSIZE	−0.010	0.478***	1.000
		(0.602)	(0.000)
[9]	CI_PERCEN	−0.000	−0.002	0.020	1.000
		(0.982)	(0.911)	(0.283)
[10]	DI_PERCEN	−0.002	−0.132***	−0.191***	0.134***	1.000
		(0.905)	(0.000)	(0.000)	(0.000)

Table 8. T-Test of independent variables PCON_BOCI

PCON_BOCI
	Mean PCON	Mean Non_PCON	Coef	t-value
ROA	4.798	3.360	−1.438***	−3.018
LEVERAGE	0.561	0.542	−0.019	−0.715
LN_TASSET	22.114	20.760	−1.354***	−22.656
GROWTH	91.536	196.047	104.511	0.826
COMSIZE	4.899	3.589	−1.311***	−19.062
DIRSIZE	5.199	4.205	−0.993***	−14.061
CI_PERCEN	37.939	36.028	−1.911***	−3.186
DI_PERCEN	10.640	12.000	1.360**	2.544

Table 9. T-Test of independent variables PCON_BODI

	PCON_BODI
	Mean PCON	Mean Non_PCON	Coef	t-value
ROA	0.318	4.326	4.008***	3.771
LEVERAGE	0.550	0.552	0.002	0.038
LN_TASSET	21.848	21.450	−0.398***	−2.751
GROWTH	8.854	148.558	139.705	0.495
COMSIZE	4.503	4.264	−0.239	−1.467
DIRSIZE	5.248	4.698	−0.551***	−3.382
CI_PERCEN	40.778	36.822	−3.956***	−2.953
DI_PERCEN	18.904	10.861	−8.043***	−6.788

Table 10. OLS regression results

	(1)	(2)	(3)
	ROA	ROA	ROA
PCON_BOCI	0.335		0.528
	(0.66)		(1.05)
PCON_BODI		−3.626***	−3.740***
		(−3.53)	(−3.62)
LEVERAGE	−4.678***	−4.677***	−4.693***
	(−14.11)	(−14.15)	(−14.19)
LN_TASSET	−0.067	−0.051	−0.093
	(−0.38)	(−0.29)	(−0.52)
GROWTH	0.000	0.000	0.000
	(0.69)	(0.63)	(0.65)
COMSIZE	0.589***	0.601***	0.576***
	(4.14)	(4.30)	(4.06)
DIRSIZE	0.751***	0.794***	0.793***
	(5.05)	(5.34)	(5.33)
CI_PERCEN	−0.021	−0.019	−0.019
	(−1.45)	(−1.30)	(−1.34)
DI_PERCEN	−0.012	−0.005	−0.004
	(−0.67)	(−0.25)	(−0.24)
Industry	Included	Included	Included
Year	Included	Included	Included
_cons	4.697	4.513	5.251
	(1.28)	(1.25)	(1.43)
r2	0.126	0.130	0.130
N	2821	2821	2821

Table 11. Second-Stage regression: Heckman

	(1)	(2)	(3)
	ROA	ROA	ROA
PCON_BOCI	0.267		0.459
	(0.56)		(0.98)
PCON_BODI		−3.664***	−3.760***
		(−3.21)	(−3.30)
LEVERAGE	−4.799***	−4.816***	−4.819***
	(−4.22)	(−4.25)	(−4.24)
LN_TASSET	−0.440	−0.478	−0.484
	(−1.16)	(−1.26)	(−1.28)
GROWTH	0.000	0.000	0.000
	(0.77)	(0.75)	(0.75)
COMSIZE	0.397**	0.381**	0.375**
	(2.16)	(2.06)	(2.03)
DIRSIZE	0.727***	0.767***	0.768***
	(5.24)	(5.53)	(5.54)
CI_PERCEN	−0.025	−0.024	−0.024
	(−1.58)	(−1.50)	(−1.51)
DI_PERCEN	−0.012	−0.004	−0.004
	(−0.54)	(−0.18)	(−0.17)
MILLS_BOCI	−2.605		−2.725
	(−1.30)		(−1.36)
MILLS_BODI		−2.938	0.000
		(−1.46)	(.)
_cons	15.585*	16.901*	16.645*
	(1.70)	(1.84)	(1.82)
Year FE	Yes	Yes	Yes
Industry FE	Yes	Yes	Yes
r2_p
r2_a	0.119	0.123	0.123
N	2821	2821	2821

t statistics in parentheses * p < 0.1, ** p < 0.05, *** p < 0.01

Table

	(1)
	PCON_BOCI
PCON_BOCI
PROBCON_BOCI	0.029***
	(4.52)
LEVERAGE	0.085*
	(1.92)
LN_TASSET	0.225***
	(10.46)
GROWTH	−0.000
	(−0.83)
COMSIZE	0.187***
	(8.63)
DIRSIZE	0.001
	(0.09)
CI_PERCEN	0.003*
	(1.83)
DI_PERCEN	−0.000
	(−0.08)
_cons	−7.373***
	(−11.87)
Year FE	Yes
Industry FE	Yes
r2_p	0.176
N	2821

t statistics in parentheses * p < 0.1, ** p < 0.05, *** p < 0.01

Table

	(1)
	PCON_BODI
PCON_BODI
PROBCON_BODI	0.080***
	(5.24)
LEVERAGE	−0.030
	(−0.89)
LN_TASSET	−0.025
	(−0.71)
GROWTH	−0.001
	(−1.49)
COMSIZE	0.008
	(0.37)
DIRSIZE	0.138***
	(5.48)
CI_PERCEN	0.006**
	(2.37)
DI_PERCEN	0.026***
	(7.24)
_cons	−2.660***
	(−3.45)
Year FE	Yes
Industry FE	Yes
r2_p	0.167
N	2821

t statistics in parentheses * p < 0.1, ** p < 0.05, *** p < 0.01