Do elections shape firm dynamics?

Florian Léon () and Laurent Weill
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Florian Léon: FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne
Laurent Weill: UNISTRA - Université de Strasbourg, FSV UK - Fakulta sociálních věd, Univerzita Karlova [Praha, Česká republika] = Faculty of Social Sciences, Charles University [Prague, Czech Republic] - UK - Univerzita Karlova [Praha, Česká republika] = Charles University [Prague, Czech Republic]

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Abstract: This paper examines the impact of elections on firm dynamics. We investigate how electoral cycles affect the total number of firms, firm entries, and firm exits using a comprehensive dataset covering 132 countries from 2006 to 2022. Our findings indicate that elections do not significantly impact the total number of firms or firm creation. However, we document a reduction in firm exits during election years and the subsequent post-election period, particularly in democratic countries. This suggests that incumbent governments may engage in economic manipulation to stabilize economic conditions and minimize business closures around elections. The absence of a corresponding increase in firm entries highlights the asymmetric political incentives favoring short-term economic stability over long-term entrepreneurial activity.

Keywords: L26 Elections; firm dynamics; Entrepreneurship; D72 (search for similar items in EconPapers)
Date: 2025-11
Note: View the original document on HAL open archive server: https://hal.science/hal-05370121v1
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Published in Economic Systems, 2025, pp.101357. ⟨10.1016/j.ecosys.2025.101357⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05370121

DOI: 10.1016/j.ecosys.2025.101357

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