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Political Ownership

Timm Betz () and Amy Pond ()
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Timm Betz: TUM School of Governance and Hochschule für Politik, Technical University of Munich
Amy Pond: Texas A&M University

Munich Papers in Political Economy from TUM School of Governance at the Technical University of Munich

Abstract: Political connections provide substantial benefits to firms. We emphasize the ownership of firms as an important channel through which political connections operate, and identify a resulting link between turnover in the political leadership and turnover in the ownership of firms: Political turnover prompts newly politically connected individuals to take, and disconnected individuals to cede, ownership of firms. This pattern should be more pronounced among firms with more immobile assets, because these are more vulnerable to government policy and have more to gain from political connections. Moreover, firms that experience changes to ownership, caused by political turnover, should pay less taxes. Analyses of firm-level data on the owners of companies in 68 middle-income countries are consistent with the theory.

Keywords: firm ownership; political turnover; political connections; political risk; policy uncertainty; corruption (search for similar items in EconPapers)
JEL-codes: H1 H13 P14 P16 P26 P48 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2020-07
New Economics Papers: this item is included in nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:aiw:wpaper:01

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