The Value of Political Connections in Fascist Italy - Stock Market Returns and Corporate Networks∗
The Value of Political Connections in Fascist Italy - Stock ∗ Market Returns and Corporate Networks Tiziana Foresti,∗∗ Nadia Garbellini,∗∗∗ and Ariel Luis Wirkierman∗∗∗∗ Keywords: Italian Economic History, Fascism, Event Studies, Social Network Analysis, Value of Political Connections, Political Economy JEL Classification: N24, C58, G14, N84, P16 1. Introduction Recent years have witnessed the flourishing of a body of economic literature concerned with the search for empirical evidence of a positive relation between political connections, economic rent and the value of firms. As a brief survey of some of these works will show, we find in this literature a wide range of definitions of “political connectedness” – from (broadly understood) personal relationships between firms’ owners or the members of its boards and politicians, through financial support offered by firms to electoral campaigns, to the political positions held (now or in the past) by directors of the boards. Johnson and Mitton (2003) present empirical evidence that, in September 1998, Malaysian firms with strong personal ties to the Prime Minister Mahathir benefited from the imposing of capital controls. Khwaja and Mian (2005), by contrast, classify a Pakistani firm as “political connected” if its director participates in an election, and offer accordingly a quantitative estimation of the rent costs of politically connected firms in banking for the Pakistani economy in the years between 1996 and 2002. Faccio et al. (2006), however, do not include contributions to political campaigns or direct (undisclosed) payments to politicians in the definition of political connectedness that they employ in their examination of the link between political connections and corporate bailouts in 35 countries over the period 1997 through 2002.
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