Businesspeople in Elected Office: Identifying Private Benefits from Firm-Level Returns

David Szakonyi

Working Papers from The George Washington University, Institute for International Economic Policy

Abstract: Do businesspeople that win elected office use their positions to help their firms? Busi- nessperson politicians are common worldwide, but little is known about the consequences of their entrance into politics. Using an original dataset of 2,706 firms in Russia, I employ a regression discontinuity design to identify the causal effect of firm directors winning seats in subnational legislatures in 2004-2013. I show that having a connection to a winning candidate increases a firm’s revenue by 60% and profit margin by 15% over their term in office. I then test between different mechanisms, finding that connected firms improve their performance by gaining access to bureaucrats, and not by signaling legitimacy to financiers. The value of win- ning a seat increases in more politically competitive regions, but falls markedly when more businesspeople win office in a convocation. Politically connected firms extract fewer benefits when faced with greater competition from other rent-seekers.

Pages: 45 pages
Date: 2017
New Economics Papers: this item is included in nep-bec, nep-cis and nep-pol
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Citations: View citations in EconPapers (5)

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Journal Article: Businesspeople in Elected Office: Identifying Private Benefits from Firm-Level Returns (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:gwi:wpaper:2017-20

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