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This research uses a difference-in-difference analysis of publicly listed companies in China from 2003 to 2012, comparing politically connected and non-politically connected firms before and after 2008.
Furthermore, we find that while the performance subsequent to the General Election of politically connected firms is worse than that of non-politically connected firms, firms with political connections for a long period exhibit better performance than those connected for short periods.
We estimate the market valuation of political connections to be 20% to 23% of the value of connected firms.
Second, does regulatory capture account for the high value of connected firms?
It appears that these advantages allowed connected firms to increase their market size and power and their borrowings.
Which MBA?, 2014 Unsustainable energy Cash all gone Split today, merge tomorrow Friends in high places Polishing up Beware the angry birds ReprintsPolitically connected firms seemed remarkably lucky in having non-tariff trade barriers to protect them.
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This figure includes $331,000 from Global Crossing and other Gary Winnick-connected firms, $292,561 from MCI WorldCom and another $120,963 from Enron Corporation.
Only a few well-connected firms can now raise money.
Recession is squeezing out smaller and less well-connected firms.
The industry's best-connected firms, however, still seem to be able to find investors.
Across all industries, politically-connected firms account for third of total employment.
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