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Political Influence, Firm Performance and Survival

Vladimir Sokolov () and Laura Solanko
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Vladimir Sokolov: National Research University Higher School of Economics

No WP BRP 60/FE/2017, HSE Working papers from National Research University Higher School of Economics

Abstract: We examine how regional-level political influence affects firm financial performance and survival. Combining representative survey data on mid-sized manufacturing firms in Russia with official registry data, we find that politically influential firms exhibit higher profitability and retain larger financial investments than non-influential firms. Most importantly, our empirical analysis suggests that the benefits of influence may be transient. Influential firms experienced significantly lower growth during our sample period than non-influential firms. Moreover, influential firms had a significantly higher probability of being liquidated than non-influential firms and the likelihood of the subsequent plant utilization by a new firm was higher for the politically influential liquidated firms.

Keywords: political influence; firm performance; firm liquidation; government quality (search for similar items in EconPapers)
JEL-codes: D22 D72 G33 G38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-cis, nep-eff, nep-pol, nep-sbm and nep-tra
Date: 2017
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Published in WP BRP Series: Financial Economics / FE, July 2017, pages - 46

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Working Paper: Political influence, firm performance and survival (2016) Downloads
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