Purpose

This paper examines the influence of different types of political connections and political uncertainty on earnings credibility in Pakistan. Based on discernible differences, connected firms are grouped into civil connected and military connected firms.

Design/methodology/approach

The authors provide evidence concerning the earnings credibility incentives of groups of political connected firms and report that their incentives are significantly different. The findings remain robust to alternate methods of earnings credibility.

Findings

The findings evidence that civil (military) connected firms report less (more) credible earnings than the control group. High political uncertainty reduces the credibility of earnings. Results for the interaction of political connections and political uncertainty variables are not significant.

Research limitations/implications

The paper investigates just one aspect of Pakistan's political economy, i.e. credibility of earnings; thus, it requires to be cautious on part of readers and policymakers. To reach a clearer conclusion, earnings credibility should be ex amined in the larger context, i.e. in conjunction with rent extractions, etc. A possible extension of the paper can be to investigate the channels of rent extractions used by the two types of connected firms.

Practical implications

The paper has contribution for policymakers as well as users of general purpose financial reports. The findings indicate that the users of general purpose financial reports should be more careful in the use of financial information during political uncertain periods and also of politically connected firms. Furthermore, policymakers should keep the larger context at the forefront while attempting to strengthen the enforcemnet regime.

Originality/value

This paper adds to extant political connections literature by identifying two types of politically connected firms and report that both groups have divergent financial reporting incentives. Furthermore, political uncertainty reduces the credibility of earnings.

中文翻译：

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巴基斯坦的政治关联企业集团、政治不确定性和盈利可信度

目的

本文探讨了不同类型的政治关系和政治不确定性对巴基斯坦收入可信度的影响。根据明显的差异，关联企业分为民用关联企业和军用关联企业。

设计/方法论/途径

作者提供了有关政治关联公司集团的盈利可信度激励的证据，并报告说它们的激励有显着不同。研究结果对于盈利可信度的替代方法仍然有效。

发现

研究结果证明，与对照组相比，民用（军用）关联公司报告的可信收益更少（更多）。高度的政治不确定性降低了收益的可信度。政治联系和政治不确定性变量相互作用的结果并不显着。

研究局限性/影响

这篇论文只调查了巴基斯坦政治经济的一个方面，即收入的可信度；因此，读者和政策制定者需要保持谨慎。为了得出更清晰的结论，盈利可信度应该在更大的背景下进行考察，即与租金提取等结合起来。本文的一个可能的扩展可以是调查两类关联企业使用的租金提取渠道。

实际影响

本文对政策制定者以及通用财务报告的用户都有贡献。研究结果表明，通用财务报告的用户在政治不确定时期以及政治关联公司的财务信息使用时应更加谨慎。此外，政策制定者在努力加强执法网制度的同时，应将大背景放在首位。

原创性/价值

本文通过识别两种类型的政治关联公司，对现有的政治关联文献进行了补充，并报告说，这两个群体具有不同的财务报告激励措施。此外，政治不确定性降低了收益的可信度。