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The Economic Benefits of Political Connections in Late Victorian Britain

Listed author(s):
  • Braggion, F.

    (Tilburg University, Center For Economic Research)

  • Moore, L.

The late-Victorian era was characteristed by especially close links between politicians and firms in the UK. Roughly half of all members of Parliament served as company directors, many as directors of multiple firms. We analyze 467 British companies over the period 1895 to 1904 to investigate the interaction of firms and politicians. We find that new-technology firms with politicians serving on their boards were more likely to issue equity finance and had higher Tobin's Q. Our evidence suggests that causality runs from director-politicians to a firm's performance, rather than in the opposite direction.

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File URL: https://pure.uvt.nl/portal/files/1325219/2011-039.pdf
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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2011-039.

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Date of creation: 2011
Handle: RePEc:tiu:tiucen:0f305e3a-a699-4697-9679-5e07bed051b9
Contact details of provider: Web page: http://center.uvt.nl

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  1. Ferguson, Thomas & Voth, Hans-Joachim, 2005. "Betting on Hitler - The Value of Political Connections in Nazi Germany," CEPR Discussion Papers 5021, C.E.P.R. Discussion Papers.
  2. Cain, Louis P. & Paterson, Donald G., 1981. "Factor Biases and Technical Change in Manufacturing: The American System, 1850–1919," The Journal of Economic History, Cambridge University Press, vol. 41(02), pages 341-360, June.
  3. Cull, Robert & Davis, Lance E. & Lamoreaux, Naomi R. & Rosenthal, Jean-Laurent, 2006. "Historical financing of small- and medium-size enterprises," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 3017-3042, November.
  4. William N. Goetzmann & Andrey D. Ukhov, 2006. "British Investment Overseas 1870-1913: A Modern Portfolio Theory Approach," Review of Finance, European Finance Association, vol. 10(2), pages 261-300.
  5. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  6. Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March.
  7. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
  8. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
  9. Fabio Braggion & Lyndon Moore, 2011. "Dividend Policies in an Unregulated Market: The London Stock Exchange, 1895--1905," Review of Financial Studies, Society for Financial Studies, vol. 24(9), pages 2935-2973.
  10. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
  11. Thomas Ferguson & Hans-Joachim Voth, 2008. "Betting on Hitler—The Value of Political Connections in Nazi Germany," The Quarterly Journal of Economics, Oxford University Press, vol. 123(1), pages 101-137.
  12. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
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