Does a firm's connection to an elected official boost its private benefits? Using data on 2,703 Russian companies during subnational elections from 2004–2013, this study employs regression discontinuity design. Connected firms see significant revenue and profitability gains under new officials.
Firm Revenue Increases: A director's election connection increases firm revenues by 60% and profits by 15%. The mechanism appears tied to bureaucratic access rather than financial signaling.
• 📊 How does political connectedness drive performance?: Firms benefit primarily through easier interactions with government officials, not enhanced legitimacy before investors.
• 📏 Quantifying Private Benefits: Regression discontinuity design measures the immediate impact of elected office on firm outcomes.
• 🔥 Context Matters: The benefits increase in competitive regions but decrease when multiple businesspeople win simultaneously.
This research suggests that electoral transitions can rapidly translate political commitments into tangible private advantages, highlighting a potential trade-off between public service and professional self-interest.
| Businesspeople in Elected Office: Identifying Private Benefits from Firm-Level Returns was authored by David Szakonyi. It was published by Cambridge in APSR in 2018. |
