The Oligarch Vanishes: Defensive Ownership, Property Rights, and Political Connections

58 Pages Posted: 19 Oct 2020 Last revised: 30 Jul 2021

See all articles by John S. Earle

John S. Earle

George Mason University - Schar School of Policy and Government; IZA Institute of Labor Economics

Scott Gehlbach

University of Chicago

Anton Shirikov

University of Wisconsin - Madison

Solomiya Shpak

Kyiv School of Economics; National Bank of Ukraine

Date Written: July 29, 2021

Abstract

We examine the use of proxies, shell companies, and offshore firms to defend property against seizure by private and state actors. Our theoretical framework emphasizes the role of political connections in defensive ownership. Linking information from investigative journalists on the key holdings of numerous Ukrainian oligarchs with firm-level administrative data on formal ownership ties, we observe some form of defensive ownership among more than two-thirds of oligarch-controlled firms, but such conduct is much less common for those connected to the incumbent regime. Further exploiting the abrupt shock to political connections that accompanied the Orange Revolution, we find a sharp rise in defensive ownership among previously connected oligarchs.

Keywords: defensive ownership, property rights, political connections, oligarchs, Ukraine

JEL Classification: D23, G32, P26

Suggested Citation

Earle, John S. and Gehlbach, Scott and Shirikov, Anton and Shpak, Solomiya, The Oligarch Vanishes: Defensive Ownership, Property Rights, and Political Connections (July 29, 2021). Available at SSRN: https://ssrn.com/abstract=3683924 or http://dx.doi.org/10.2139/ssrn.3683924

John S. Earle

George Mason University - Schar School of Policy and Government ( email )

3351 Fairfax Drive
MS 3B1
Arlington, VA 22201
United States
703-993-8023 (Phone)

HOME PAGE: http://earle.gmu.edu

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Scott Gehlbach (Contact Author)

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Anton Shirikov

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

Solomiya Shpak

Kyiv School of Economics ( email )

Ukraine

National Bank of Ukraine ( email )

str. 9 Instytutska
Kyiv, 01601
United States

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