Big Business Owners in Politics

Abstract

This paper investigates a little studied but common mechanism that …rms use to obtain state favors: business owners themselves seeking election to top o¢ ce. Using Thailand as a research setting, we …nd that the more business owners rely on government concessions or the wealthier they are, the more likely they are to run for top o¢ ce. Once in power, the market valuation of their …rms increases dramatically. Surprisingly, the political power does not in ‡uence the …nancing strategies of their …rms. Instead, business owners in top o¢ ce use their policy-decision powers to implement regulations and public policies favorable to their …rms. Such policies hinder not only domestic competitors but also foreign investors. As a result, these politically connected …rms are able to capture more market share.

Auditor Choice in Politically Connected Firms

“…To calculate the propensity score, we analyze a comprehensive set of firm characteristics that should capture the likelihood that a given firm will be politically connected according to prior research. More specifically, we consider size, leverage, the largest shareholder's ownership stake, state ownership, and cross‐listing as connected firms are likely to be different from nonconnected peers along these characteristics (see, e.g., Faccio [, ], Leuz and Oberholzer‐Gee [], Boubakri, Cosset, and Saffar [], and Bunkanwanicha and Wiwattanakantang []).…”

Do Firms Decouple Corporate Governance Policy and Practice?

“…Many cabinet members in the governments led by telecom tycoon Thaksin Shinawatra belonged to families that owned large businesses. Bunkanwanicha and Wiwattanakantang (2009) show that the market value of firms connected to these cabinet members increased much more during this period than the value of similar non‐connected firms.…”

Political Connection and Stock Returns: A Longitudinal Study

“…The economic benefits of political connections in Thailand are noted to be quite substantial. For example, Bunkanwanicha and Witwattanakantang () report that the market‐to‐book ratio of firms connecting to Dr. Thaksin Shinawatra increased by 242.16% during just the first two years after he entered office.…”