Former Politicians as Corporate Directors: Good for Business?

June 12, 2013 Leave a comment

Former Politicians as Corporate Directors: Good for Business?

Stephen Gray University of Queensland – Business School; Duke University – Fuqua School of Business; Financial Research Network (FIRN)

Iman Harymawan Airlangga University

John Nowland City University of Hong Kong

May 27, 2013

Abstract: 
International studies suggest that directors with political connections provide significant benefits to shareholders. Yet, whether this is the case in the political and business environment in Australia is unknown. In this study, we examine the prevalence of former politicians as non-executive directors in ASX-listed companies and the market reaction to their appointment. In our sample of 1,561 companies in 2007, we find that former federal, state, local and foreign politicians hold directorships in 5.32% of firms. Our event study of new director appointments shows that the market reaction to the appointment of former politicians is significantly lower than non-politicians. This indicates that shareholders do not value the expertise that former politicians bring to corporate boards in Australia, particularly when their political parties are not in power and when they have less political and director experience. In summary, we find no evidence that former politician directors possess valuable political connections in Australia.

Filed under Research

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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