The fall of fascism in Italy in 1943-1944 was followed by the issuance of laws and decrees that made former fascist politicians ineligible for political office. We use this setting as a quasi-natural experiment that exogenously disrupted then prevalent corporate political connections.
We find that following the exogenous disruption of their political connections, previously politically connected firms underperform their peers. The relative underperformance is both statistically and economically significant. These results imply that political connections lead to misallocation of economic resources because resources allocated to politically connected firms are not allocated to their best uses.
We study how political factors can shape competition in the mobile telecommunication sector. We show that the way a government designs the rules of the...
Many firms voluntarily incur the costs of attempting to influence politicians. However, estimates of the value of political connections have been made...