The Mortality Cost of Political Connections FISMAN, RAYMOND; WANG, YONGXIANG
Review of economic studies/The review of economic studies,
10/2015, Letnik:
82, Številka:
4 (293)
Journal Article
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We study the relationship between the political connections of Chinese firms and workplace fatalities. In our preferred specification, we find that the worker death rate for connected companies is ...two to three times that of unconnected firms (depending on the sample employed), a pattern that holds for withinfirm estimations. The connections-mortality relationship is attenuated in provinces where safety regulators' promotion is contingent on meeting safety targets. In the absence of fatalities, connected firms receive fewer reports of major violations for safety compliance, whereas in years of fatal accidents the rate of reported violations is identical. Moreover, fatal accidents produce negative returns at connected companies and are associated with the subsequent departure of well-connected executives. These results provide suggestive evidence that connections enable firms to avoid (potentially costly) compliance measures, rather than using connections to avoid regulatory response after accidents occur. Our findings emphasize the social costs of political connections, and suggest that appropriate regulatory incentives may be useful in mitigating these costs.
Exploiting a unique data set containing information on the estimated bribe payments of Ugandan firms, we study the relationship between bribery payments, taxes and firm growth. Using ...industry-location averages to circumvent potential problems of endogeneity and measurement errors, we find that both the rate of taxation and bribery are negatively correlated with firm growth. A one-percentage point increase in the bribery rate is associated with a reduction in firm growth of three percentage points, an effect that is about three times greater than that of taxation. This provides some validation for firm-level theories of corruption which posit that corruption retards the development process to an even greater extent than taxation.
This paper has concentrated on the valuation of rents for a relatively small subsample of Indonesian firms. However, the 25 groups associated with these firms account for a very large percentage of ...economic activity in Indonesia, with revenues of more than US $60 billion in 1995. Thus, for a very large part of the Indonesian economy, political connections apparently matter a lot. Although the analysis focused on Indonesia, there is reason to believe that the results apply to many other countries.
We study cultural norms and legal enforcement in controlling corruption by analyzing the parking behavior of United Nations officials in Manhattan. Until 2002, diplomatic immunity protected UN ...diplomats from parking enforcement actions, so diplomats’ actions were constrained by cultural norms alone. We find a strong effect of corruption norms: diplomats from high‐corruption countries (on the basis of existing survey‐based indices) accumulated significantly more unpaid parking violations. In 2002, enforcement authorities acquired the right to confiscate diplomatic license plates of violators. Unpaid violations dropped sharply in response. Cultural norms and (particularly in this context) legal enforcement are both important determinants of corruption.
We document the relationship between distributional preferences and voting decisions in a large and diverse sample of Americans. Using a generalized dictator game, we generate individual-level ...measures of fair-mindedness (the weight on oneself versus others) and equality-efficiency tradeoffs. Subjects' equality-efficiency tradeoffs predict their political decisions: equality-focused subjects are more likely to have voted for Barack Obama in 2012, and to be affiliated with the Democratic Party. Our findings shed light on how American voters are motivated by their distributional preferences.
We study how corporate governance affects firm value through the decision of whether to fire or retain the chief executive officer (CEO). We present a model in which weak governance-which prevents ...shareholders from controlling the board-protects inferior CEOs from dismissal, while at the same time insulates the board from pressures by biased or uninformed shareholders. Whether stronger governance improves retain/replace decisions depends on which of these effects dominates. We use our theoretical framework to assess the effect of governance on the quality of firing and hiring decisions using data on the CEO dismissals of large U.S. corporations during 1994-2007. Our findings are most consistent with a beneficent effect of weak governance on CEO dismissal decisions, suggesting that insulation from shareholder pressure may allow for better long-term decision making.
This paper was accepted by Brad Barber, finance.
We study a 2004 program designed to motivate Chinese bureaucrats to reduce accidental deaths. Each province received a set of "death ceilings" that, if exceeded, would impede government officials' ...promotions. For each category of accidental deaths, we observe a sharp discontinuity in reported deaths at the ceiling, suggestive of manipulation. Provinces with safety incentives for municipal officials experienced larger declines in accidental deaths, suggesting complementarities between incentives at different levels of government. While realized accidental deaths predict the following year's ceiling, we observe no evidence that provinces manipulate deaths upward to avoid ratchet effects in the setting of death ceilings.
We study the impact of nationalism and interstate frictions on international economic relations by analyzing market reaction to adverse shocks to Sino-Japanese relations in 2005 and 2010. Japanese ...companies with high China exposure suffer relative declines during each event window; a symmetric effect is observed for Chinese companies with high Japanese exposure. The effect on Japanese companies is more pronounced for those operating in industries dominated by Chinese state-owned enterprises, whereas firms with high Chinese employment experience lower declines. These results emphasize the role of countries' economic and political institutions in mediating the impact of interstate frictions on firm-level outcomes.
Individual Preferences for Giving Fisman, Raymond; Kariv, Shachar; Markovits, Daniel
The American economic review,
12/2007, Letnik:
97, Številka:
5
Journal Article
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We utilize graphical representations of Dictator Games which generate rich individual-level data. Our baseline experiment employs budget sets over feasible payoff-pairs. We test these data for ...consistency with utility maximization, and we recover the underlying preferences for giving (trade-offs between own payoffs and the payoffs of others). Two further experiments augment the analysis. An extensive elaboration employs three-person budget sets to distinguish preferences for giving from social preferences (trade-offs between the payoffs of others). And an intensive elaboration employs step-shaped sets to distinguish between behaviors that are compatible with well-behaved preferences and those compatible only with not well-behaved cases.
Meet the economic gangster. He's the United Nations diplomat who double-parks his Mercedes on New York City streets at rush hour because the cops can't touch him—he has diplomatic immunity. He's the ...Chinese smuggler who dodges tariffs by magically transforming frozen chickens into frozen turkeys. The dictator, the warlord, the unscrupulous bureaucrat who bilks the developing world of billions in aid. The calculating crook who views stealing and murder as just another part of his business strategy. And, in the wrong set of circumstances, he might just be you. In Economic Gangsters, Raymond Fisman and Edward Miguel take readers into the secretive, chaotic, and brutal worlds inhabited by these lawless and violent thugs. Join these two sleuthing economists as they follow the foreign aid money trail into the grasping hands of corrupt governments and shady underworld characters. Spend time with ingenious black marketeers as they game the international system. Follow the steep rise and fall of stock prices of companies with unseemly connections to Indonesia's former dictator. See for yourself what rainfall has to do with witch killings in Tanzania—and more.
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