Abstract
AbstractUsing an unbalanced panel of 539 Vietnamese districts from 2000 to 2010 and the corresponding politicians’ profiles, we examine firm behaviour in response to favouritism by top‐ranking politicians towards their districts of birth. Results show that the number of firms tend to increase in the home districts of politicians after they assume office. This favouritism is particularly pronounced for private domestic firms, construction firms and rural areas. However, state‐owned firms are indifferent. We discuss the non‐response of state‐owned firms, potential mechanisms and channels behind the statistical results.
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