ONLINE. Political Connections and Corporation Performance in Egypt, 1890–1952
Title: Political Connections and Corporation Performance in Egypt, 1890–1952
Abstract: A growing body of literature documents that political connections influence firm outcomes. We contribute to this literature by assembling two novel fine-grained datasets on corporations and Members of Parliament (MPs) in colonial and monarchical Egypt from 1890 to 1952. We define political connections of a corporation as having at least one MP among its founders, and we examine the effect of connections on monthly Egyptian stock market returns of publicly traded firms in 1907–1940 and on monthly entry and exit dynamics in 1890–1952. We use a range of empirical methods to disentangle the cause effect on firm value. Our preliminary findings reveal that political connections had a positive effect on firm performance. Politically connected corporations had higher firm value, and were less likely to exit. But costly corporations were negatively selected into adding MPs as founders. Politically connected industries have fewer entries, but conditional on entry, entrants are more politically connected than less connected industries. The evidence suggests that having political connections made incorporation easier for companies and the presence of political connections distorted competitive forces of creative destruction.
Organization of the seminar:
- Online seminar - platform: Zoom
- the zoom link for the seminar will be sent by email in the week before the seminar takes place