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

Mara Faccio
Purdue University - Krannert School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

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 Classifications: D72, F39, G28, G3

Working Paper Series

Date posted: July 24, 2006 ; Last revised: August 05, 2009

Suggested Citation

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


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Contact Information

Mara Faccio (Contact Author)
Purdue University - Krannert School of Management ( email )
1310 Krannert Building
West Lafayette, IN 47907-1310
United States
Centre for Economic Policy Research (CEPR)
90-98 Goswell Road
London EC1V 7RR United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels Belgium
HOME PAGE: http://www.ecgi.org
Feedback to SSRN (Beta)


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