Measuring the extent and implications of corporate political connections in prewar Japan

Tetsuji Okazaki and Michiru Sawada
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Tetsuji Okazaki: Faculty of Economics, The University of Tokyo

No CIRJE-F-1006, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: This paper explores the extent of political connections of firms, and examines their implications on firm values, using firm-level data from prewar Japan. We collect the data of directors, their positions in the House of Representatives, stock prices and financial performance, on publicly traded companies in late 1920s and early 1930s Japan. It is found that almost 20% of the publicly traded companies had political connections through politician directors. Especially, firms in the regulated industries such as the electric power and railroad, were more likely to have political connections. Overall, there is no evidence that connections with politics added firm values. On the other hand, with respect to those firms that newly obtained political connections, we found that the stock returns improved from the pre-election period to the post-election period.

Pages: 32 pages
Date: 2016-03
New Economics Papers: this item is included in nep-cdm, nep-his and nep-pol
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http://www.cirje.e.u-tokyo.ac.jp/research/dp/2016/2016cf1006.pdf (application/pdf)

Related works:
Journal Article: Measuring the extent and implications of corporate political connections in prewar Japan (2017)
Working Paper: Measuring the extent and implications of corporate political connections in prewar Japan (2016)
Working Paper: Measuring the extent and implications of corporate political connections in prewar Japan (2014)
Working Paper: Measuring the Extent and Implications of Corporate Political Connections in Prewar Japan (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2016cf1006

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