The Impact of Governmental Ownership, Political Connections, and Related-Party Transactions on External Financing and Investment

This study investigated the relations between governmental ownership, political relations and related party transactions on external financing and investment. Sampling was done by systematic screening method from companies listed on the Tehran Stock Exchange, 102 companies were selected during the years 2014-2020. The research hypotheses were tested using a multiple regression model with fixed effects. Governmental ownership and political connections have a negative and significant relation with external financing, and related party transactions have a positive and significant relation with external financing. But Governmental ownership, political connections, and related party transactions are not related to investment. government-owned companies use government funding instead of external financing. Corporate political connections are not necessarily to attract external funding. related party transactions can be done with the aim of optimally allocating internal resources, reducing transaction costs, and improving asset returns among group companies. governmental ownership is a tool for achieving government goals. Investment is also being revised as economic conditions change. Political connections can lead to the distortion or induction of inappropriate investment decisions. The lack of a relation between related party transactions and investment confirms the conflict of interest and the abuse of the company's resources through them.