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Political Ownership

Author

Listed:
  • Timm Betz

    (TUM School of Governance and Hochschule für Politik, Technical University of Munich)

  • Amy Pond

    (Texas A&M University)

Abstract

Political connections provide substantial benefits to firms. We emphasize the ownership of firms as an important channel through which political connections operate, and identify a resulting link between turnover in the political leadership and turnover in the ownership of firms: Political turnover prompts newly politically connected individuals to take, and disconnected individuals to cede, ownership of firms. This pattern should be more pronounced among firms with more immobile assets, because these are more vulnerable to government policy and have more to gain from political connections. Moreover, firms that experience changes to ownership, caused by political turnover, should pay less taxes. Analyses of firm-level data on the owners of companies in 68 middle-income countries are consistent with the theory.

Suggested Citation

  • Timm Betz & Amy Pond, 2020. "Political Ownership," Munich Papers in Political Economy 01, Munich School of Politics and Public Policy and the School of Management at the Technical University of Munich.
    • Handle: RePEc:aiw:wpaper:01
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    More about this item

    Keywords

    firm ownership; political turnover; political connections; political risk; policy uncertainty; corruption;
    All these keywords.

    JEL classification:

    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • H1 - Public Economics - - Structure and Scope of Government
    • H13 - Public Economics - - Structure and Scope of Government - - - Economics of Eminent Domain; Expropriation; Nationalization

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