Journal Article

Big Business Owners in Politics

Pramuan Bunkanwanicha and Yupana Wiwattanakantang

in The Review of Financial Studies

Published on behalf of The Society for Financial Studies

Volume 22, issue 6, pages 2133-2168
Published in print June 2009 | ISSN: 0893-9454
Published online September 2008 | e-ISSN: 1465-7368 | DOI: https://dx.doi.org/10.1093/rfs/hhn083

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

Keywords: G15; G38; K23; P48

Journal Article.  15495 words. 

Subjects: International Financial Markets ; Corporate Regulation ; Law and Economics ; Other Economic Systems