What the study found
Political donations were associated with lower cash holdings and lower investment efficiency, and with higher leverage. The authors describe these results as highlighting agency concerns regarding political donations in Australia.
Why the authors say this matters
The study suggests that political donations may affect corporate financial decision-making, and the authors conclude that this adds to the literature on political donations by examining links with multiple corporate outcomes.
What the researchers tested
The researchers examined the relationship between political donations and three corporate outcomes: cash holdings, leverage, and investment efficiency. They used publicly available political donation data from the Australian Electoral Commission and studied the top 300 firms listed on the Australian Stock Exchange from 2006 to 2022, yielding 3,404 firm-year observations.
What worked and what didn't
Multivariate ordinary least squares regression showed a negative relationship between political donations and cash holdings, a positive relationship with leverage, and a negative relationship with investment efficiency. The results remained robust after additional tests, including Heckman selection, entropy balancing, and two-stage least squares, which the authors used to address selection bias and endogeneity concerns.
What to keep in mind
The abstract does not describe detailed limitations beyond the concern for selection bias and endogeneity that the authors tested for. The findings are based on Australian listed firms and publicly available donation data, so the scope is limited to that setting.
Key points
- Political donations were negatively related to cash holdings.
- Political donations were positively related to leverage.
- Political donations were negatively related to investment efficiency.
- The study used data from the top 300 Australian Stock Exchange firms from 2006 to 2022.
- The results remained robust after tests for selection bias and endogeneity.
Disclosure
- Research title:
- Political donations are linked to lower cash holdings and investment efficiency
- Authors:
- Ali Aloraini, Effiezal Abdul Wahab, Imran Haider
- Institutions:
- Prince Sattam Bin Abdulaziz University, Curtin University
- Publication date:
- 2026-04-02
- OpenAlex record:
- View
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