Communist Imprints and Corporate Behavior

67 Pages Posted: 6 Jul 2021

See all articles by Philip Schnorpfeil

Philip Schnorpfeil

Goethe University Frankfurt

Lutz Johanning

WHU - Otto Beisheim School of Management

Date Written: June 28, 2021

Abstract

Are there long-term effects of communism on corporate behavior? We study firms in formerly communist East Germany using localized variation in West German influence. West German-influenced firms make decisions less consistent with communist norms compared to non-influenced firms: they vary employment more and rely on internal finance less. Supporting a beliefs-based channel, firms in counties where propaganda of these norms was more effective exhibit stronger communist ideology in their decisions. Corporate behavior also discontinuously varies along the former Inner German border, which we again trace to ideological imprints. Our results, which withstand numerous robustness tests, suggest a novel element of the Soviet-communist legacy.

Keywords: communist doctrine, corporate financing, employment protection

JEL Classification: D22, D83, D91, G32, G41, P20

Suggested Citation

Schnorpfeil, Philip and Johanning, Lutz, Communist Imprints and Corporate Behavior (June 28, 2021). Available at SSRN: https://ssrn.com/abstract=3875479 or http://dx.doi.org/10.2139/ssrn.3875479

Philip Schnorpfeil (Contact Author)

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Lutz Johanning

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany
+49 261 6509 720 (Phone)

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