Finance and Politics: Special Interest Group Influence during the Nationalization and Privatization of Conrail

Ang, James S.; Boyer, Carol M.

doi:10.2139/ssrn.251413

Cited by 19 publications

(9 citation statements)

References 33 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Furthermore, the monotonic relation between output and the rule of law may not hold if two unproductive activities exist. This paper, therefore, extends work on connected firms (Note 3) (Roberts, 1990;Kroszner & Stratmann, 1998;Ang & Boyer, 2000;Morck, Stangeland & Yeung, 2000;Fisman, 2001;Johnson & Mitton, 2003;Faccio, 2006;among others), and argues that although corrupt investors may be less productive than the average investor (Faccio, 2006), they are located in the more lucrative industries. Moreover, and different from the literature that investigates the role bribes to the government play in income transfer (Grossman &Helpman, 1994 and1995;Dixit et al, 1997;Bulte, Damania, & Lopez, 2007;among others), this paper focuses on how corrupting transition is used by corrupt investors to expropriate others, and shows how this process leads to corruption of some industries, but not others.…”

Section: Introductionsupporting

confidence: 60%

The Corruption of Transition

Hochman

Zilberman

2013

IJBM

View full text Add to dashboard Cite

A political economic framework is used to describe an economy following transition to private ownership. The transition, characterized by massive privatization, is accompanied by a change in the legal system, which is influenced by the elite who may be described as either corrupt or non-corrupt. The ability of the corrupt elite to influence the ruling party may lead to weak legal institutions, which cause underinvestment, corruption, and capturing of lucrative industries by corrupt investors. By introducing heterogeneity among industries, we extend the literature and show that the corrupt investors corrupt the more lucrative industries, and in corrupt economies corrupt investors may separate themselves from the non-corrupt investors. Furthermore, we identified two methods used by the corrupt investors to siphon profit -output stealing and profit stealing -and illustrate that corrupt investors may substitute between the two methods to alleviate the constraints created by stronger institutions. To this end, strengthening the institutions only in one dimension may, at the end of the day, cause output, as well as investment, to decline.

show abstract

Section: Introductionsupporting

confidence: 60%

The Corruption of Transition

Hochman

Zilberman

2013

IJBM

View full text Add to dashboard Cite

show abstract

“…For example, Mara Faccio, in a series of her solo or coauthored papers, 10 defines a firm's political connection as follows: "A company is defined as being connected with a politician if at least one of its largest shareholders (anyone controlling at least 10 percent of voting shares) or one of its top officers (CEO, president, vice-president, chairman, or secretary) is a member of parliament, a minister, or is closely related to a top politician or party" (Faccio 2006, p. 369 firms are less likely to be investigated by the SEC, and even if they are investigated, the average penalty is lower for them. Other studies that adopted this definition include Roberts (1990), Kroszner and Stratmann (1998), and Ang and Boyer (2000).…”

Section: Measuring Political Connectionsmentioning

confidence: 99%

Political Connections of the Boards of Directors and Defense Contractors Excessive Profits

Wang¹

2013

View full text Add to dashboard Cite

Naval Postgraduate SchoolReport Documentation Page Public reporting burden for the collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Washington Headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington VA 22202-4302. Respondents should be aware that notwithstanding any other provision of law, no person shall be subject to a penalty for failing to comply with a collection of information if it does not display a currently valid OMB control number.

show abstract

“…We address this problem by instrumenting the measure of financial development. The instrument we use is a country's legal origin, as it is standard in the law and finance literature (La Porta et al (1997), Beck et al (2000)). Second, because of the multicollinearity induced by the "dummy problem" we can only identify relative effects.…”

Section: Winners and Losers From Financial Developmentmentioning

confidence: 99%

Trade Liberalization and the Politics of Financial Development

Braun¹,

Raddatz²

2005

Policy Research Working Papers

View full text Add to dashboard Cite

Abstract:A well-developed financial system enhances competition in the industrial sector by allowing easier entry. The impact varies across industries, however. For some, small changes in financial development quickly induce entry and dissipate incumbents' rents, generating strong incentives to oppose improvement of the financial system. In other sectors incumbents may even benefit from increased availability of external funds. The relative strength of promoters and opponents determines the equilibrium level of financial system. This may be perturbed by the effect of trade liberalization on the strength of each group. Using a sample of 41 trade liberalizers, we conduct an event study and show that the change in the strength of promoters vis-à-vis opponents is a very good predictor of subsequent financial development. The result is not driven by changes in demand for external funds or by the success of the trade policy. The relationship is mediated by policy reforms, the kind that induce competition in the financial sector, in particular. Real effects follow not so much from capital deepening but mainly through improved allocation. The effect is stronger in countries with high levels of governance, suggesting that incumbents resort to this costly but more subtle way of restricting entry where it is difficult to obtain more blatant forms of anti-competitive measures from politicians.

show abstract

Finance and Politics: Special Interest Group Influence during the Nationalization and Privatization of Conrail

Cited by 19 publications

References 33 publications

The Corruption of Transition

The Corruption of Transition

Political Connections of the Boards of Directors and Defense Contractors Excessive Profits

Trade Liberalization and the Politics of Financial Development

Contact Info

Product

Resources

About