35 Pages Posted: 24 Jul 2006 Last revised: 5 Aug 2009
Date Written: 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.
Keywords: Political connections, leverage, benefits
JEL Classification: D72, F39, G28, G3
Suggested Citation: Suggested Citation
Faccio, Mara, Differences between Politically Connected and Non-Connected Firms: A Cross Country Analysis (August 3, 2009). Available at SSRN: https://ssrn.com/abstract=918244 or http://dx.doi.org/10.2139/ssrn.918244
By Mara Faccio