Do Political Connections Pay for Pledging of Shares: Evidence from India

Authors

• Kousik Ganguly, O.P. Jindal Global University, Haryana, India
• Ajay Kumar Mishra, Indian Institute of Technology (IIT) Kharagpur, West Bengal, India
• Bhavik Parikh, Saint Francis Xavier University, Nova Scotia, Canada

Abstract

This study examines the stock-pledging behavior of promoters in politically connected Indian firms, using NSE-listed companies from 2009 to 2019. We investigate how capital raised through stock pledging affects investment in high-risk projects and assess the impact of margin call pressure. Results show that higher stock pledging reduces corporate investment; however, promoters with political ties are more inclined to pursue riskier projects. Moreover, politically connected firms exhibit lower stock return volatility, suggesting that political connections help shield these firms from both investment risk and return fluctuations.

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Recommended Citation

Ganguly, Kousik; Mishra, Ajay Kumar; and Parikh, Bhavik (2026) "Do Political Connections Pay for Pledging of Shares: Evidence from India," American Business Review: Vol. 29: No. 1, Article 11.
DOI: 10.37625/abr.29.1.235-263
Available at: https://digitalcommons.newhaven.edu/americanbusinessreview/vol29/iss1/11

DOI

10.37625/abr.29.1.235-263