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Losing Your Dictator: Firms During Political Transition

Author

Listed:
  • Felipe González
  • Mounu Prem

Abstract

Can firms transfer distortions across political regimes? To answer this question, we use a novel dataset and a network analysis to study firms during Chile’s transition to democracy. We find that firms with links to the dictatorship were relatively unproductive before the transition, increased their productive capacity, enjoyed higher profits, and obtained more loans from state-owned banks during political transition. We test for different explanations and provide suggestive evidence consistent with strategic behavior aiming to improve their market position in democracy. These results suggests that distortions can be transferred across political regimes.

Suggested Citation

  • Felipe González & Mounu Prem, 2017. "Losing Your Dictator: Firms During Political Transition," Documentos de Trabajo 506, Instituto de Economia. Pontificia Universidad Católica de Chile..
    • Handle: RePEc:ioe:doctra:506
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    File URL: https://www.economia.uc.cl/docs/doctra/dt_506.pdf
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    Citations

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    Cited by:

    1. Jorge-Sotelo, Enrique, 2022. "Politicians, bankers and the Great Depression: The Spanish banking crisis of 1931," eabh Papers 22-01, The European Association for Banking and Financial History (EABH).
    2. Aldunate, Felipe & González, Felipe & Prem, Mounu & Urzúa, Francisco, 2020. "Privatization and business groups: Evidence from the Chicago Boys in Chile," Explorations in Economic History, Elsevier, vol. 78(C).
    3. Aldunate, Felipe & Gonzalez, Felipe & Prem, Mounu, 2021. "Make the Economy Scream? U.S. Banks and Foreign Firms During the Cold War," SocArXiv bhwk7, Center for Open Science.
    4. repec:osf:socarx:z8f4h_v1 is not listed on IDEAS
    5. Jacobi, Daniel & King, Elizabeth M. & Montenegro, Claudio & Orazem, Peter, 2025. "Governance, Risks, and Returns to Human Capital," ISU General Staff Papers 202504141344270000, Iowa State University, Department of Economics.
    6. Ling-Yun He & Sha Liu, 2023. "Impact of China Railway Express on Regional Resource Mismatch—Empirical Evidence from China," Sustainability, MDPI, vol. 15(11), pages 1-17, May.
    7. Beg, Sabrin, 2021. "Tenancy and clientelism," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 201-226.
    8. Colonnelli, Emanuele & Lagaras, Spyridon & Ponticelli, Jacopo & Prem, Mounu & Tsoutsoura, Margarita, 2022. "Revealing corruption: Firm and worker level evidence from Brazil," Journal of Financial Economics, Elsevier, vol. 143(3), pages 1097-1119.
    9. Jacobi, Daniel & King, Elizabeth M. & Montenegro, Claudio & Orazem, Peter, 2025. "Governance, Risks, and Returns to Human Capital," ISU General Staff Papers 202504141344270000, Iowa State University, Department of Economics.
    10. Gonzalez, Felipe & Prem, Mounu, 2021. "The Legacy of the Pinochet Regime," SocArXiv v5yjf, Center for Open Science.
    11. Gonzalez, Felipe & Coy, Felipe & Prem, Mounu & von Dessauer, Cristine, 2022. "Uncertainty from dictatorship to democracy: Evidence from business communications," SocArXiv gz934, Center for Open Science.
    12. repec:osf:socarx:gz934_v1 is not listed on IDEAS
    13. González, Felipe & Prem, Mounu, 2018. "The value of political capital: Dictatorship collaborators as business elites," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 217-230.
    14. González, Felipe & Prem, Mounu & von Dessauer, Cristine, 2024. "Empowerment or Indoctrination? Female Training Programs under Dictatorship," IZA Discussion Papers 17163, Institute of Labor Economics (IZA).
    15. repec:osf:socarx:bhwk7_v1 is not listed on IDEAS
    16. González, Felipe & Muñoz, Pablo & Prem, Mounu, 2021. "Lost in transition? The persistence of dictatorship mayors," Journal of Development Economics, Elsevier, vol. 151(C).
    17. Girardi, Daniele & Bowles, Samuel, 2018. "Institution shocks and economic outcomes: Allende's election, Pinochet's coup and the Santiago stock market," Journal of Development Economics, Elsevier, vol. 134(C), pages 16-27.
    18. Aldunate, Felipe & González, Felipe & Prem, Mounu, 2024. "The limits of hegemony: U.S. banks and Chilean firms in the Cold War," Journal of Development Economics, Elsevier, vol. 166(C).
    19. Aldunate, Felipe & Gonzalez, Felipe & Prem, Mounu, 2022. "The Limits of Hegemony: Banks, Covert Actions, and Foreign Firms," SocArXiv z8f4h, Center for Open Science.
    20. Felipe González & Mounu Prem, 2017. "Can Television Bring Down a Dictator? Evidence from Chile’s “No” Campaign," Documentos de Trabajo 15681, Universidad del Rosario.
    21. repec:osf:socarx:d6x54_v1 is not listed on IDEAS
    22. repec:osf:socarx:64mf9_v1 is not listed on IDEAS

    More about this item

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • N86 - Economic History - - Micro-Business History - - - Latin America; Caribbean

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