Risk Of Political Interference Research Articles

Ownership structure, monitoring, and market value of companies: evidence from an unusual privatization mode

This study analyses the impact of ownership structure and market liquidity on company value. We investigate different aspects of ownership: the risk of political interference, private investors vs. the state acting as influential blockholders, and preferential political treatment of companies. Using a unique dataset of Polish partial privatizations initiated by shares transfers to entities under limited government influence, we find that government divestments can enhance company value, due to reduction in risk of political interference. A potential increase in the liquidity of trades in transferred companies’ shares also boosts their market value. On the other hand, an increased likelihood of the emergence of private blockholders able to expropriate minority shareholders reduces the firm’s market value. Our results support the political view of privatization: governments have objectives different to profit maximization, which leads to suboptimal investment from this point of view and lower market value of companies. We also develop a model to empirically distinguish between different aspects of ownership on company value.

A ESTRUTURA DE PROPRIEDADE DAS CORPORAÇÕES: CONEXÕES POLÍTICAS SOB A PERSPECTIVA DA DEPENDÊNCIA DE RECURSOS

After the 90s, which heralded the era of privatization in Brazil, the government became a shareholder in various private companies. Government participation can interfere in the objectives, strategies and ultimately in the performance and survival of corporations. This paper aims to discuss this phenomenon and the importance of political connections in terms of ownership structure for an organization's survival. The objectives of governments as owners tend to conflict with those of other shareholders, because their goals tend to have more of a social and political element, which can lead to organizational deficiency in the performance of the company. One may come to believe that when a company has the government as a shareholder, its survival is ensured, as suggested by the theory of resource dependence, but this participation may in fact negatively affect the company's performance due to government objectives. This work proposes a way to mitigate the problem while ensuring the benefits of this connection with the government by reducing the stake of government in companies to minimum levels, which would reduce the risk of political interference.

Managed Courts Under Unstable Political Environments: Recruitments and Resignations in the 1990s Japanese Judiciary

Because of the risk of political interference, in countries with managed courts jurists who share ruling-party preferences disproportionately self-select into judicial careers. During political turmoil, such jurists will find judicial careers less attractive. Orthodox potential jurists will disproportionately shun the courts, and orthodox incumbent judges will disproportionately resign. Unorthodox potential jurists, on the other hand, might find the judiciary more attractive. Combining data on a random sample of 1,605 Japanese lawyers and all 2,502 judges hired between 1971 and 2001, we locate evidence consistent with these hypotheses: after the political crisis of 1993, the recruitment of young lawyers from elite universities lagged, while the number of early resignations increased.