Oligarchs, Political Regime Changes, and Firm Valuation

42 Pages Posted: 27 Jan 2007 Last revised: 11 Apr 2013

See all articles by Benjamin Maury

Benjamin Maury

Hanken School of Economics

Eva Liljeblom

Swedish School of Economics and Business Administration

Date Written: February 27, 2009

Abstract

This paper examines the impact of a regime shift on the valuation of politically powerful oligarch firms. Focusing on the Yeltsin-Putin regime shift in Russia, we find that the valuations of oligarch-controlled firms are significantly higher under the Putin regime than under the Yeltsin regime after controlling for industry and time effects. The findings suggest that the increasing cost of extracting private benefits outweigh the reduction in the value of political connections following the political regime change. The results are also consistent with changes in the risk of state expropriation. Our results indicate that effects driven by the political regime change complement the traditional view stating that increased ownership concentration improved the performance of Russian oligarch firms.

Keywords: oligarchs, regime shift, subversion of institutions, political connections, ownership structure, valuation

JEL Classification: G3, G32, P26

Suggested Citation

Maury, Benjamin and Liljeblom, Eva, Oligarchs, Political Regime Changes, and Firm Valuation (February 27, 2009). Available at SSRN: https://ssrn.com/abstract=959369 or http://dx.doi.org/10.2139/ssrn.959369

Benjamin Maury (Contact Author)

Hanken School of Economics ( email )

P.O. Box 479
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Finland

Eva Liljeblom

Swedish School of Economics and Business Administration ( email )

P.O. Box 479
FI-00101 Helsinki, 00101
Finland
+358-9-431 33 291 (Phone)
+358-9-431 33 393 (Fax)