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http://hdl.handle.net/10419/57749
  
Title:Political connectedness and firm performance: Evidence from Germany PDF Logo
Authors:Niessen, Alexandra
Ruenzi, Stefan
Issue Date:2009
Series/Report no.:CFR Working Paper 07-15
Abstract:This paper investigates politically connected firms in Germany. With the introduction of a new transparency law in 2007, information on additional income sources for all members of the German parliament became publicly available. We find that members of the conservative party (CDU/CSU) and the liberal party (FDP) are more likely to work for firms than members of left-wing parties (SPD and The Left) or the green party (Alliance 90/The Greens). Politically connected firms are larger, less risky, and have lower market valuations than unconnected firms. They also have fewer growth opportunities, but slightly better accounting performance. On the stock market, connected firms significantly outperform unconnected firms in 2006, i.e. prior to the publication of the data on political connections. Differences in stock market performance are much smaller in 2007.
Subjects:Political Connectedness
Firm Value
Firm Performance
JEL:G14
G18
G30
G38
H89
K29
L14
Document Type:Working Paper
Appears in Collections:CFR Working Papers, Centre for Financial Research (CFR), Universität Köln

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