Big Business Owners in Politics

Abstract

This paper investigates a little studied but common mechanism that firms use to obtain state favors: business owners themselved seeking election to top office. Using Thailand as a research setting, we find that the more business owners rely on government conccessions or the wealthier they are, the more likely they are to run for top office. Once in power, the market valuation of their firms increase dramatically. Surprisingly, the political power does not influence the financing strategies of their firms. Instead, business owners in top office use their policy-decision powers to implement regulations and public policies favorable to their firms. Such policies hinder not only domestic competitors but also foreign investors. As a result, these political connected firms are able to seize more market share.

Keywords: Political connections, Family firms, Corporate Governance, Emerging Economies

JEL Classification: G15, G34, G38, K23