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Gains from Early Support of a New Political Party

Author

Listed:
  • Leonardi, Marco

    (University of Milan)

  • Mossucca, Rossella

    (LearLab)

  • Schivardi, Fabiano

    (LUISS Guido Carli University)

  • Severgnini, Battista

    (Copenhagen Business School)

Abstract

We study the potential benefits and mechanisms of firms' political connections by analyzing the Italian experience, where, in the early nineties, Silvio Berlusconi, a rich TV tycoon, became the leader of the conservative political coalition. Using firm-level data, we find that the 101 companies supporting Berlusconi's successful bid to become prime minister did better than controls in terms of sales and employment but not of productivity. The results are confirmed when we instrument the decision to support Berlusconi with electoral outcomes in the 1921 elections. We also find suggestive evidence that the supporters' superior performance is stronger in sectors with high external financial dependence and high advertising intensity.

Suggested Citation

  • Leonardi, Marco & Mossucca, Rossella & Schivardi, Fabiano & Severgnini, Battista, 2019. "Gains from Early Support of a New Political Party," IZA Discussion Papers 12549, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12549
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    More about this item

    Keywords

    productivity; political connections; policy regulation;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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