Losing Your Dictator: Firms During Political Transition
Authors
González, Felipe
Prem, Mounu
Editor
Publication date
2019-02-05
Document language
eng
Publisher
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Abstract
We use new firm-level data from Chile to document resource misallocation in favor of politically connected firms during the transition from dictatorship to democracy. We find that firms with links to the Pinochet regime (1973–1990) were relatively unproductive and benefited from resource misallocation during the dictatorship, and those distortions persisted into democracy. We show that, after learning that the dictatorship was going to end, firms in the dictator’s network increased their productive capacity, experienced higher profits, and obtained more loans from the state-owned bank. We test for different explanations and provide suggestive evidence consistent with connected firms aiming to shield their market position for the transition to democracy.
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Códigos JEL
D2 - Production and Organizations, G2 - Financial Institutions and Services, G3 - Corporate Finance and Governance, M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics: Business Economics, N86 - Micro-Business History: Latin America; Caribbean
item.page.subjectjelspa
D2 - Producción y organizaciones, G2 - Instituciones y servicios financieros, G3 - Gobierno y financiación de la empresa, M2 - Administración de empresas y economía de la empresa; Marketing; Contabilidad; Economía de la gestión de personal: Economía de la empresa, N86 - Historia de las microempresas: América Latina; Caribe
Keywords
Transition, Distortions, Firms, Networks
