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Big Business Owners and Politics: Investigating the Economic Incentives of Holding Top Office

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  • Bunkanwanicha, Pramuan
  • Wiwattanakantang, Yupana
  • ウィワッタナカンタン, ユパナ

Abstract

This paper investigates the mechanisms that firms use to get state favors. We focus on a less well studied but common mechanism: business owners seeking election to top office. Using Thailand as a research setting, we find that business owners who rely on government concessions or are wealthier are more likely to run for top office. Once in power the market valuation of their firms increases dramatically. Surprisingly, the owners' political power does not change their firms' financing strategies. Instead, we show that business owners in top office use their policy decision powers to implement regulations and public policies favorable to their firms. Such policies hinder not only domestic competitors but also foreign investors. As a result, connected firms are able to seize more market share.

Suggested Citation

  • Bunkanwanicha, Pramuan & Wiwattanakantang, Yupana & ウィワッタナカンタン, ユパナ, 2006. "Big Business Owners and Politics: Investigating the Economic Incentives of Holding Top Office," CEI Working Paper Series 2006-10, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2006-10
    Note: October 13, 2006
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/13486/wp2006-10a.pdf
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    More about this item

    Keywords

    Business groups; Corporate governance; Emerging economies; Family firms; Political connections;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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