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The value of political connections in the first German democracy: Evidence from the Berlin stock exchange

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  • Lehmann-Hasemeyer, Sibylle
  • Opitz, Alexander

Abstract

In this paper, we provide the first overview over all political connections for all firms listed on the Berlin stock exchange in 1924 and for the same sample of firms four years later. In contrast to anecdotal evidence which suggest that these political connections had a positive effect on firms' performance, an event study based on the election in December 1924 and May 1928 shows only little evidence that political connections had a positive impact on firm value. These results complement previous research emphasizing that political connections might have mattered less in democracies. Indeed, this seems true for Germany's first democracy - even though it was a very unstable one.

Suggested Citation

  • Lehmann-Hasemeyer, Sibylle & Opitz, Alexander, 2017. "The value of political connections in the first German democracy: Evidence from the Berlin stock exchange," Hohenheim Discussion Papers in Business, Economics and Social Sciences 24-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    • Handle: RePEc:zbw:hohdps:242017
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    Cited by:

    1. Lehmann-Hasemeyer, Sibylle H. & Neumayer, Andreas, 2018. "The persistence of ownership inequality. Investors on the German stock exchanges, 1869 – 1945," Working Papers 8, German Research Foundation's Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour", Humboldt University Berlin.
    2. Lehmann-Hasemeyer, Sibylle H. & Neumayer, Andreas, 2018. "The persistence of ownership inequality: Investors on the German stock exchanges, 1869-1945," Hohenheim Discussion Papers in Business, Economics and Social Sciences 20-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.

    More about this item

    Keywords

    Political Connections; Interwar Germany; Stock Market Performance;
    All these keywords.

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