Examining Political Connections to Study Institutional Change: Evidence from Two Unexpected Election Outcomes in South Korea

The World Economy, Vol. 42, No. 4, April 2019, pp. 1152-1179

44 Pages Posted: 2 May 2019

See all articles by Kai Jäger

Kai Jäger

King's College London - Department of Political Economy

Seungjun Kim

University of Maryland

Multiple version iconThere are 2 versions of this paper

Date Written: April 7, 2019

Abstract

We argue that the analysis of multiple political connections in an event study framework can improve the study of institutional change. Based on a unique dataset of multiple political relationships of 4,936 South Korean board of director members, we show that the large business conglomerates, the chaebol, did not benefit from the unexpected conservative election victories in the 2012 South Korean parliamentary and presidential elections. By contrast, personal connections to candidates and to the opposition party were still considered to matter for small firms. Our findings suggest that Korea’s political economy has evolved into a hybrid regime in which the political power of large multinational corporations is limited, but the influence of political connections is still relevant for smaller firms. The corruption scandal that led to the impeachment of President Park in 2017 and the long-term development of market capitalization appear to be congruent with the results of our study.

Keywords: Political Connections, Networks, Rent-Seeking, Corruption, Institutional Change, Event Study Methodology, South Korea, Chaebol, Political Economy

JEL Classification: D27, G14, N2

Suggested Citation

Jäger, Kai and Kim, Seungjun, Examining Political Connections to Study Institutional Change: Evidence from Two Unexpected Election Outcomes in South Korea (April 7, 2019). The World Economy, Vol. 42, No. 4, April 2019, pp. 1152-1179, Available at SSRN: https://ssrn.com/abstract=3367905 or http://dx.doi.org/10.2139/ssrn.3367905

Kai Jäger (Contact Author)

King's College London - Department of Political Economy ( email )

Strand Building
London
United Kingdom

Seungjun Kim

University of Maryland

College Park, MD
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
6
Abstract Views
285
PlumX Metrics