Differences between Politically Connected and Non-Connected Firms: A Cross Country Analysis

35 Pages Posted: 24 Jul 2006 Last revised: 5 Aug 2009

See all articles by Mara Faccio

Mara Faccio

Mitchell E. Daniels, Jr. School of Business, Purdue University; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Date Written: August 3, 2009

Abstract

Evidence from firms in 47 countries shows that companies with political connections have higher leverage and higher market shares, but they underperform compared to non-connected companies on an accounting basis. Differences between connected and unconnected firms are more pronounced when political links are stronger. Differences also vary depending on the level of corruption and the degree of economic development in individual countries.

Keywords: Political connections, leverage, benefits

JEL Classification: D72, F39, G28, G3

Suggested Citation

Faccio, Mara, Differences between Politically Connected and Non-Connected Firms: A Cross Country Analysis (August 3, 2009). Available at SSRN: https://ssrn.com/abstract=918244 or http://dx.doi.org/10.2139/ssrn.918244

Mara Faccio (Contact Author)

Mitchell E. Daniels, Jr. School of Business, Purdue University ( email )

403 W. State Street
West Lafayette, IN 47907-1310
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
2,143
Abstract Views
9,876
Rank
13,387
PlumX Metrics