Abstract
The objective of this paper is to study the effect of cronyism on debt access. Cronyism is concretized by two factors: regulation and political connections. The study is carried out on a sample of Tunisian firms for the period between 2006-2013. First, we test the effect of regulation and political connections on debt access by proceeding with a multiple linear regression model. Results show that regulation is positively associated with the debt ratio. However political connections do not increase the debt ratio. Then, we applied a difference-in-difference model to take account of the natural experiment of the political uprising. The effect of cronyism is confirmed only before this event.
Subject
General Business, Management and Accounting