Abstract
A stream of literature examines the link between electoral cycles and economic activity at the firm level, but we do not know much about managers’ policy expectations and beliefs after an electoral cycle. This study attempts to address this question by exploiting an electoral cycle within a cross-sectional survey. Using the Indian parliamentary election of 2014 as exogenous variation within the India Enterprise Survey (2014), we find that a decisive electoral outcome has an effect on managerial perceptions of the business environment, measured through measures of corruption and tax administration. While we find mixed evidence for the overall effect of the election on managerial perceptions, we find smaller firms appear to have higher expectations from a new government. Results also suggest that managers reflect the mood of their region’s voting choices.
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