Electoral systems and the economy: a firm-level analysis

Isa Camyar () and Bahar Ulupinar ()
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Isa Camyar: St. Francis College
Bahar Ulupinar: West Chester University of Pennsylvania

Constitutional Political Economy, 2019, vol. 30, issue 1, No 1, 30 pages

Abstract: Abstract Prior research presents mixed results for electoral impact on economic performance, thereby raising the question of whether electoral systems matter economically at all. We argue that electoral systems can conceivably generate a robust economic impact at the firm level. This argument is grounded in a recent scholarship on the political economy of corporate governance. Analysts discern electoral systems as a significant determinant of a country’s corporate governance regime and its two central components: investor and employment protection. Building on a wealth of research relating investor and employment protection to firms’ economic behavior, we develop the hypothesis that firm performance is stronger under plurality-majoritarian rules than under proportional rules. Our panel study of firms in 21 advanced democracies from 1989 to 2007 supports our hypothesis. Overall, this research helps to fill in an important gap in understanding of why it matters to choose one electoral system over another.

Keywords: Political economy; Institutions; Corporate governance; Firms; Economic performance (search for similar items in EconPapers)
JEL-codes: G30 G38 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10602-019-09274-6

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