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Electoral systems and the economy: a firm-level analysis

Author

Listed:
  • Isa Camyar

    (St. Francis College)

  • Bahar Ulupinar

    (West Chester University of Pennsylvania)

Abstract

Prior research presents mixed results for electoral impact on economic performance, thereby raising the question of whether electoral systems matter economically at all. We argue that electoral systems can conceivably generate a robust economic impact at the firm level. This argument is grounded in a recent scholarship on the political economy of corporate governance. Analysts discern electoral systems as a significant determinant of a country’s corporate governance regime and its two central components: investor and employment protection. Building on a wealth of research relating investor and employment protection to firms’ economic behavior, we develop the hypothesis that firm performance is stronger under plurality-majoritarian rules than under proportional rules. Our panel study of firms in 21 advanced democracies from 1989 to 2007 supports our hypothesis. Overall, this research helps to fill in an important gap in understanding of why it matters to choose one electoral system over another.

Suggested Citation

  • Isa Camyar & Bahar Ulupinar, 2019. "Electoral systems and the economy: a firm-level analysis," Constitutional Political Economy, Springer, vol. 30(1), pages 1-30, March.
    • Handle: RePEc:kap:copoec:v:30:y:2019:i:1:d:10.1007_s10602-019-09274-6
    DOI: 10.1007/s10602-019-09274-6
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    Cited by:

    1. Pijus Krūminas, 2019. "Public R&D under different electoral rules: evidence from OECD countries," Constitutional Political Economy, Springer, vol. 30(3), pages 300-329, September.
    2. Timothy Yu-Cheong Yeung & Izaskun Zuazu, 2020. "The impact of electoral rules on manufacturing industries: evidence of disaggregated data of 61 industries of 55 countries," Constitutional Political Economy, Springer, vol. 31(4), pages 458-488, December.

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    More about this item

    Keywords

    Political economy; Institutions; Corporate governance; Firms; Economic performance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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