Politically Connected Firms

2006/02/01 by Mara Faccio · 4,017 citations
Business, Management and Accounting · #Accounting #Business #Connection (principal bundle) #Corporate Finance and Governance #Corporate Social Responsibility Reporting #Corporate governance #Economics #Finance #Financial system #Foreign direct investment #International economics #Investment (military) #Language change #Law #Macroeconomics #Market economy #Monetary economics #Political Influence and Corporate Strategies #Political science #Politics #Shareholder #Shareholder value #Value (mathematics)

paper · doi:10.1257/000282806776157704

published in American Economic Review 96(1), 369-386 (American Economic Association)

openalex publication_date 2006/02/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/05

Abstract

Examination of firms in 47 countries shows a widespread overlap of controlling shareholders and top officers who are connected with national parliaments or governments, particularly in countries with higher levels of corruption, with barriers to foreign investment, and with more transparent systems. Connections are diminished when regulations set more limits on official behavior. Additionally, I show that the announcement of a new political connection results in a significant increase in value.

Citations

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