Political connection status decisions and benefits for firms experiencing financial difficulties in emerging markets

There is relatively little research exploring the benefits of political connection status decisions for firms experiencing financial difficulties in emerging markets. This paper investigates financially distressed that benefit from their Indonesia. study uses three measurements distress as dependent variables: Altman Z-score, negative working capital, and interest coverage ratio. Firm size, profitability, liquidity, leverage, operating cash flow are independent variables. Quarterly data period 2012 to 2018 327 non-financial companies were obtained Indonesia Stock Exchange. To analyze relationship between on connections supporters or opponents, random effects probit model (REPM) was used. The results show with opposition government have a strong positive correlation difficulties. Meanwhile, correlation. Companies politically connected experience terms capital ratios. Then, debt financing not found be significant problem support government. indications they benefited connections, such more accessible financing.