Political influence, firm performance and survival

Vladimir Sokolov and Laura Solanko

No 20/2016, BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT)

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. At the same time, we find no association between regional political influence and access to bank lending. Most importantly, our empirical analysis suggests that the benefits of influence may be transient. Influential firms experienced significantly lower growth during our 2004–2010 sample period than non-influential firms. Moreover, influential firms had a significantly higher probability of going bankrupt after the 2008 global financial crisis than non-influential firms.

JEL-codes: D22 D72 G38 (search for similar items in EconPapers)
Date: 2016
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Related works:
Working Paper: Political Influence, Firm Performance and Survival (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofitp:bdp2016_020

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