Political connections and revenue-expense matching: evidence from Malaysia

Purpose This study aims to examine the association between political connections and revenue-expense matching. Design/methodology/approach Using a sample of 465 Malaysian listed firms from 2000 to 2022, Dichev and Tang’s (2008) revenue-expense matching model is used to assess the impact of political connections. Findings Politically connected firms (PCFs) exhibit weaker contemporaneous revenue-expense matching, driven by both accrual and cash flow channels. This pattern persists across PCF types, with variation in magnitude across connection forms. Following Malaysia’s 2018 regime change, PCFs rely more on past expenses and reduce forward-looking matching, indicating diminished discretionary reporting. Originality/value Using a sample of 465 Malaysian listed firms over the period 2000-2022, this study employs Dichev and Tang’s (2008) revenue-expense matching model to examine the impact of political connections on revenue-expense matching.