Differences between Politically Connected and Non-Connected Firms: A Cross Country Analysis
Purdue University - Krannert School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
August 3, 2009
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.
Number of Pages in PDF File: 35
Keywords: Political connections, leverage, benefits
JEL Classification: D72, F39, G28, G3
Date posted: July 24, 2006 ; Last revised: August 5, 2009
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