16:50 - 18:30
PS10
Room:
Room: Club B
Panel Session 10
Yannick Stiller - Business versus voters: Whose interests do legislators consider in trade policy?
Adrian del Rio - Business as usual? Political Connections and Authoritarian Breakdown. Evidence from Malaysia
Natascha Neudorfer - There Are Such People: The Role of Corruption in the 2021 Parliamentary Elections in Bulgaria
Business as usual? Political Connections and Authoritarian Breakdown. Evidence from Malaysia
PS10-2
Presented by: Adrian del Rio
Adrian del Rio 1, Jennifer Gandhi 2, Allison Cuttner 3
1 Center for Eastern European and International Studies
2 Emory University
3 University of Toronto
What is the fate of firms connected to authoritarian regimes when the government falls from power? Recent studies show that firms’ political connections tend to trump their private benefit, yet we know little about whether a positive return is warranted when a firms’ patron is ousted. Using an original dataset on Malaysian firms, we employ weighted fixed-effect analysis to explain why and how the opposition’s historic electoral victory in 2018 affected politically connected firms’ financial performance. The findings suggest that firms connected to the ousted government improve 9.4% percentage points in returns in an additional year after elections. Further evidence reveals that these rents stem primarily from re-instituting the government’s practice of selective patronage, aimed at consolidating power at the expense of the former ruling party’s support bases. We find little evidence that formal policy influence or positive external perceptions enhance politically connected firms after power alternation.