Politically Connected Firms
2006/02/01 by Mara Faccio · 77 citations
Business, Management and Accounting · #Political Influence and Corporate Strategies #Corporate Finance and Governance #Corporate Social Responsibility Reporting
paper · doi:10.1257/000282806776157704
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.
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