Seize the State, Seize the Day: State Capture, Corruption, and Influence in Transition

Hellman, Joel S.; Jones, Geraint; Kaufmann, Daniel

doi:10.1596/1813-9450-2444

Cited by 472 publications

(301 citation statements)

References 14 publications

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“…His insight has since been extended in both theoretical and empirical work relating to Russian and other countries in the Former Soviet Union (Sonin 2002, Hellman, Jones, andKaufmann 2000). Because it fits very naturally with our analysis, we focus on Russia in the following discussion.…”

Section: Transition Economiesmentioning

confidence: 86%

The injustice of inequality

Glaeser

Scheinkman

Shleifer

2003

Journal of Monetary Economics

385

180

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In many countries, the operation of legal, political and regulatory institutions is subverted by the wealthy and the politically powerful for their own benefit. This subversion takes the form of corruption, intimidation, and other forms of influence. We present a model of such institutional subversion -focusing specifically on courts -and of the effects of inequality in economic and political resources on the magnitude of subversion. We then use the model to analyze the consequences of institutional subversion for the law and order environment in the country, as well as for capital accumulation and growth. We illustrate the model with historical evidence from Gilded Age United States and the transition economies of the 1990s. We also present some cross-country evidence consistent with the basic prediction of the model.

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Section: Transition Economiesmentioning

confidence: 86%

The injustice of inequality

Glaeser

Scheinkman

Shleifer

2003

Journal of Monetary Economics

385

180

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“…Taylor (2006) and Ellis (2011) document that there is growing perception among African and Latin American nations that Chinese state-owned firms are granted special favours and protections by various host governments that are unavailable to other MNCs. It is apparent that the advantageous position accorded by political relations is more accessible to those with formidable political ties (Hellman et al, 2003). Our second hypothesis is:…”

Section: /36mentioning

confidence: 89%

State-owned MNCs and host country expropriation risk: The role of home state soft power and economic gunboat diplomacy

2014

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Expropriation risk has a binding effect on foreign direct investment (FDI). However, state-owned multinational corporation (MNCs) may counter the monopoly power of the host state by leveraging the political influence of their home government. The magnitude of this counter force, we argue, may vary, depending on the strength of political relations between the home and host state, and the level of economic dependence of the host country on the home market. We find supporting evidence of our hypotheses using Chinese firm level FDI information between 2003 and 2010.

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“…Crony capitalism also suggests that political leaders use their power to create rents for their families' and relatives' businesses. Empirical evidence supporting these predictions prevails both in the US and other countries (e.g., Agrawal and Knoeber 2001, Krozner and Stratmann 1998, Goldman, Rocholl, and So 2009, Cooper, Gulen, and Ovtchinnikov 2010, Fisman, 2001, Hellman, Jones and Kaufmann 2000, Johnson and Mitton 2002, Faccio 2006). For example, using an event study approach, Fisman (2001) and Faccio (2006) show that political connections are positively associated with firm value, which Faccio, Masulis, and McConnell (2006) and Claessens, Feijen, and Laeven (2008) suggest arises from preferred access to credit, regulatory favours, and government financial assistance.…”

Section: Introductionmentioning

confidence: 91%

Political capital and CEO entrenchment: Evidence from CEO turnover in Chinese non-SOEs

Cao¹,

Pan

Qian

et al. 2017

Journal of Corporate Finance

115

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Previous theoretical and empirical studies suggest that CEOs' political connections are valuable to firms. We examine whether such connections become entrenched if the expected political capital fails to materialize and the firm lacks other types of political power. Using a sample of listed non-SOEs in China, we show that politically connected CEOs have a lower probability of turnover and cause a weaker turnover-performance sensitivity than non-politically connected CEOs. Further analyses show that these turnover patterns are not consistent with alternative explanations, such as superior managerial ability, being a member of controlling families or being promoted from the inside. The turnover patterns are less pronounced in firms with alternative political power, such as connected boards or being vital to the local economy. Following the turnover of politically connected CEOs, firm performance does not necessarily undergo significant improvement. Our results call for new theories that comprehend the real effects of political connections. AbstractPrevious theoretical and empirical studies suggest that CEOs' political connections are valuable to firms. We examine whether such connections become entrenched if the expected political capital fails to materialize and the firm lacks other types of political power. Using a sample of listed non-SOEs in China, we show that politically connected CEOs have a lower probability of turnover and cause a weaker turnover-performance sensitivity than non-politically connected CEOs. Further analyses show that these turnover patterns are not consistent with alternative explanations, such as superior managerial ability, being a member of controlling families or being promoted from the inside. The turnover patterns are less pronounced in firms with alternative political power, such as connected boards or being vital to the local economy. Following the turnover of politically connected CEOs, firm performance does not necessarily undergo significant improvement. Our results call for new theories that comprehend the real effects of political connections.JEL classifications: G32, G34, G38

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Seize the State, Seize the Day: State Capture, Corruption, and Influence in Transition

Cited by 472 publications

References 14 publications

The injustice of inequality

The injustice of inequality

State-owned MNCs and host country expropriation risk: The role of home state soft power and economic gunboat diplomacy

Political capital and CEO entrenchment: Evidence from CEO turnover in Chinese non-SOEs

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