The thesis consists of three essays in development and political economics. Political Connection, Government Patronage and Firm Performance: Evidence from Chinese Manufacturing Firms The paper tests whether politically connected firms receive preferential favor from the government, as measured by state capital investment from the central government and subsidies. My results suggest that firms connected with one more top leader from the State Council receive 9.4 percent more subsidies, firms connected with one more leader who holds positions on both the Central Committee and the State Council obtain 23 percent more state capital and then have a 2 percentage point higher product markup. When there is extra state capital due to political connections, other domestic capital is crowded out. The heterogeneous effects find that firms with more employees, but lower sales and less profit tend to receive more state capital if equally connected, while firms with higher sales tend to obtain more subsidies. This additional state capital and these subsidies do not seem to improve the firm's performance. The Determinants of Media Bias in China We measure and investigate the determinants of political control of newspapers in China. We find that more strictly politically controlled newspapers cover disasters and corruption more than their commercial competitors, most likely in order to monitor lower level officials. We also find that they cover leaders and the official news agency Xinhua to a larger extent. We find that in the cross section, the political control correlates negatively with GDP per capita and population size, but there is no time trend in the political control of Chinese newspapers in the 2000s. Finally, we analyze the effect of a reform to close down all county papers in 2003. The reduced competition significantly affected the degree of political control of the remaining papers. Chinese Microblogs and Drug Quality This paper examines the impact of the introduction of Sina Weibo, the most popular microblog in China, on the quality of drugs on the market. I find that the number of bad drugs is decreasing in Sina Weibo use: if the Sina Weibo use is doubled, the number of bad drugs found will be reduced by 21 percent. I show that the reduction of bad drugs is driven by two mechanisms: Sina Weibo induces more effort from the Drug Administration and it deters the production of bad drugs. The results suggest that microblogs can play an important role in monitoring both the public and the private sectors, especially in a context with media censorship.

In this thesis I explore two factors that impose constraints for external finance of firms in Emerging market, the lack of property rights protection and the absence of political connections. I demonstrates that strengthening of property rights protection and sustaining tighter political connection is beneficial for firms external finance.

The results show that political connection has positive relation with ROE, but negative with ROA which means businessmen seek rent by from government and meanwhile, politicians extract rents from companies they manage. If members of Committee of the Chinese¡¦s People¡¦s Political Consultative Conference and firms¡¦ Community Party also serving on the board have great influence on firms¡¦ performance and resource. Besides, poor performance does not lead firms to gain political connection. Most import, power transition does not influence firms¡¦ value, especially those with old political connection.

The Chinese economy went through significant reforms in the past few decades but remains highly politicized to this day. The financial reporting environment is also predominantly opaque, being correlated with low accounting quality of firms. A key measure to observe is earnings quality. I test and compare the earnings smoothing, managing towards targets, and timely loss recognition earnings management behaviors between politically connected and unconnected firms listed in China. Based on the empirical results, I find that the politically connected firms engage in a higher degree of earnings management and thus have lower earnings quality.

I examined how politics affects corporate policies and value in two dissertation essays. In my first essay, we investigate whether diversity in points of view within corporate boards, as captured by the diversity in political ideology of board members, can affect a firm's performance. We employ personal political contributions' data to measure political ideology distance among groups of inside, outside directors and the CEO. Our empirical evidence strongly supports the notion that outside directors' monitoring effectiveness is more likely to be enhanced when their viewpoints are distinct from those of management. We find that ideologically diverse boards are associated with better firm performance, lower agency costs and less insiders' discretionary power over the firm's Political Action Committee (PAC) spending. Taken together, our results lead us to conclude that multiplicity of standpoints in corporate boardrooms is imperative for board effectiveness. In my second essay, we document that firms surrounded by high degrees of policy risk generated by local politicians' legislative activities present significantly high stock returns, indicating investors' perception of policy risk. We find that the diverse political strategies firms implement 1) successfully mitigate such policy risk, 2) help firms to acquire more lucrative procurement contracts, and 3) even get firms in trouble with legal issues. Additional results reveal that poor stock performance related to litigation is significantly recovered by political connections. Overall, our results reflect that investors view corporate political activities as effective hedging strategies against policy risk. Collectively, politics plays a critical role in determining corporate policies and/or value.

The political connections of businesses bear implications for the economy. This dissertation studies the political connection of railways in the United Kingdom during the 19th century using several novel data sets. The first chapter of the dissertation begins by quantitatively investigating the implications of the political connections of railways for capital investment. Politically connected railways did significantly more capital investment than their non-connected counterparts. In addition, within-firm increases in political connections were associated with increased subsequent capital investment. The latter part of chapter one introduces the private bill process in the legislature as a likely channel relating political connections and capital investment. Politically connected firms proposed and passed considerably more legislation enabling capital investment than non-politically connected firms. Chapter two of the dissertation focuses on consumer and employee safety, relating safety to political connections and showing that politically connected railways were considerably deadlier than non-politically connected railways. A century of fatal railway accidents data is presented along with supplementary data sources to demonstrate this point. Chapter three of the dissertation looks at political connections as the outcome rather than as the explanatory variable. Political connections are related to voting rights in U.K. constituencies across five general elections spanning major franchise reforms. Within-constituency results show that for a given constituency increases in the franchise are associated with decreased likelihood that railway directors will run or win seats in the House of Commons.

Doações legais a campanhas eleitorais podem comprar influência? Diversos estudos desenvolvidos na literatura detectaram evidências de que empresas podem se beneficiar de conexões estabelecidas com políticos por meio de doações em campanhas eleitorais, sendo que a potencial influência pode ser entendida pelos investidores como uma vantagem competitiva. Com a mudança de cenário trazida pela decisão do Supremo Tribunal Federal (STF) de proibir as doações por pessoas jurídicas em campanhas eleitorais a partir de 2016, este trabalho buscou avaliar qual seria o possível impacto inicial que essa nova legislação eleitoral poderia trazer para o ambiente econômico. A amostra foi composta por empresas com ações negociadas na B3 durante o período de 2010 a 2017, sendo os dados referentes a doações para os cargos de presidente, senador e deputado federal nas eleições de 2010 e 2014. Esta pesquisa foi dividida em duas partes. A primeira parte utilizou a metodologia do estudo de evento, estabelecendo janelas de teste que representaram o andamento do processo jurídico e as repercussões no mercado. Os resultados sugerem que as empresas doadoras, principalmente as que contribuíram para candidatos da base governista, obtiveram retornos anormais positivos e significantes quando o supremo aceitou julgar essa matéria, porém o mesmo não se refletiu para as demais janelas de evento. Já a segunda parte buscou estimar se as doações geravam dois benefícios para essas entidades, que são: maior acesso a crédito com menor custo financeiro via BNDES e maior agressividade fiscal, devido ao exercício de influência que essas empresas doadoras poderiam ter sobre os legisladores e representantes do Estado. Os resultados dos modelos de regressões de dados em painel apontam que os empréstimos concedidos pelo BNDES tem relação positiva e significativa com as doações feitas por empresas. Das medidas de agressividade fiscal utilizadas nesta pesquisa, book tax difference (BTD) e effective tax rate (ETR), somente ETR foi negativamente significante. Essa variável representa a taxa efetiva de tributos sobre o lucro e a literatura diz que quanto menor o ETR, maior a probabilidade de a empresa ser fiscalmente mais agressiva. Complementando a análise, por meio de modelos de diferenças em diferenças, foi estimado o efeito da decisão final do STF sobre esses eventuais benefícios, porém, não houve indícios de que a proibição tenha afetado as variáveis estudadas. É importante mencionar que para as medidas de agressividade fiscal, é possível que o curto espaço de tempo não tenha sido o suficiente para poder observar o efeito da proibição, uma vez que esses efeitos iniciais podem demorar a surgir. / Can legal campaign contributions buy influence? Several studies in the literature have detected evidence that companies that donate can benefit from these established connections with politicians, and that potential influence can be understood as a competitive advantage for these companies. With the change brought about by the decision of the Supreme Federal Court (STF) to ban company donations in electoral campaigns from 2016, this work sought to evaluate what would be the possible impact that this new electoral legislation could bring to the economic environment. The sample comprised companies with shares traded at B3 during the period from 2010 to 2017, with data referring to the donations for the positions of president, senator and federal deputy in the 2010 and 2014 elections. This research was divided into two parts. The first part used the methodology of the event study, establishing event windows that represented the progress of the process and the repercussions in the market. The results suggest that donor firms, especially those that contributed to candidates from the ruling base, obtained abnormal positive and significant returns when the supreme judge accepted the matter, but the same effect was not reflected for the other event windows. The second part sought to estimate if the donations generated two benefits for these entities: greater access to credit with lower financial costs through BNDES and greater fiscal aggressiveness, due to the exercise of influence that these donor companies could have on the legislators and representatives of the State. The results of the panel data regression models indicate that loans granted by BNDES are positive and significant with the donations made by companies. Of the fiscal aggressiveness measures used in this research, the book tax difference (BTD) and effective tax rate (ETR), only ETR was negatively significant. This variable represents the effective tax rate on profit and the literature says that the lower ETR, the greater the probability that company will be more tax aggressive. Complementing the analysis, by means of models of differences in differences, the effect of the final decision of the STF on these possible benefits was estimated. Only the BNDES loans were negatively and significantly affected by the change, suggesting that the grants could represent a way of influencing the investment decisions of this government-controlled bank. Regarding measures of fiscal aggression, it is possible that the short time was not enough to be able to observe the effect of the prohibition, since these initial effects may be slow to arise in this case.

Cette thèse consiste en trois recherches sur le financement bancaire des entreprises. Le premier essai met l’accent sur l’influence des relations bancaires et des connexions politiques sur l’accès des entreprises au crédit. Il utilise un ensemble de données collectées manuellement sur les moyennes entreprises vietnamiennes pour montrer que les relations bancaires (durée de la relation avec la banque principale et le nombre de banques) et les connexions politiques ont des effets complémentaires sur la maximisation de la disponibilité du crédit pour les entreprises. Cette recherche a des implications politiques pour les économies émergentes caractérisées par la corruption gouvernementale locale ; elle suggère que les décideurs politiques devraient préférer les systèmes bancaires transactionnels aux systèmes bancaires relationnels, et elle expose le côté obscur des relations bancaires. Le deuxième essai examine les effets des connexions politiques et de la corruption locale sur les structures du pool bancaire des entreprises. En utilisant le même ensemble de données que dans notre premier essai, nous constatons que les entreprises politiquement connectées ont tendance à établir leurs relations bancaires principales avec les banques connectées. Nous constatons également que les entreprises connectées réduisent le nombre de banques et la diversité des types de propriétés des banques dans leurs pools bancaires lorsqu’elles établissent des relations avec les banques connectées ; ces entreprises maintiennent ces structures de pool bancaire lorsque la corruption est répandue dans leur province d’origine. Les résultats montrent que la corruption locale est associée positivement au nombre de banques et à la diversification des types de propriétés des banques. Le dernier essai explore la structure du pool bancaire des entreprises dans les économies émergentes caractérisées par la corruption. Dans le modèle théorique proposé, les gestionnaires d’entreprise maximisent une fonction d’utilité attendue qui dépend à la fois de la valeur de l’entreprise et de la consommation personnelle. En fonction du poids qu’ils attribuent à chaque composante, les gestionnaires choisissent parmi trois structures du pool bancaire pour combiner un certain nombre de banques et le choix d’une banque principale plus ou moins corrompue. Le test de ce modèle repose sur un riche ensemble de données provenant d’entreprises vietnamiennes que dans notre premier essai. Les résultats confirment que les entreprises et les banques sont de même niveau d’intégrité. En outre, les entreprises ont tendance à augmenter le nombre de banques dans le pool bancaire lorsqu’elles ne peuvent pas établir une relation avec une banque principale souhaitable. / This thesis consists of three research on the firms’ bank financing. The first essay focuses the influences of bank–firm relationships and political connections on firms’ access to credit. It uses a manually collected data set of Vietnamese medium-sized enterprises to show that bank–firm relationships (length of relationship with main bank and number of banks) and political connections have complementary effects on maximizing firms’ availability of credit. This research has policy implications for emerging economies characterized by local government corruption; it suggests that policymakers should prefer transactional banking systems to relationship banking systems, and it exposes the dark side of bank–firm relationships. The second essay investigates the effects of political connections and local corruption on the structures of firms’ bank pools. Using the same data set with our first essay, it finds that politically connected firms tend to establish their main bank relationships with connected banks. It also finds that connected firms reduce their numbers of banks and their diversity of bank ownership types in their bank pools when they achieve main bank relationships with connected banks; such firms maintain these bank pool structures when corruption is prevalent in their home provinces. Results demonstrate that local corruption is associated positively with number of banks and diversification of bank ownership types. The last essay explores the structure of firms’ bank pools in emerging economies characterized by corruption. In the proposed theoretical model, firm managers maximize an expected utility function that depends on both firm value and personal consumption. According to the weight they assign to each component, managers choose among three bank pool structures to combine some number of banks and the choice of a main bank that is more or less corrupt. The test of this model relies on the same rich data set with our first essay. The results confirm that firms and banks match, in terms of their levels of integrity. Moreover, firms tend to increase the number of banks in the bank pool when they cannot achieve a relationship with a desirable main bank.

The union organization rate has continuously diminished since the mid 90's. The aim of this essay is to investigate non-members approach to the union. Central questions are what personal experiences the respondents have of the union and how they view the union as a phenomenon. According to previous research the main cause of the great decline in membership to LO are the increased membership fees to the union and the unemployment insurance funds (UIF) in 2007. The increased fee led to a greater accumulated cost for those who were both union- and UIF -members, which had a negative effect on the membership numbers for the union. This study is based on qualitative interviews with three persons working within the agreement area of IF Metall and three persons within the agreement area of Kommunal. To interpret our empirical material we use Max Weber´s theory of social action. The study shows that the membership fee is an important factor for the decision to stay out of the union but even more important is the lack of personal benefits that union membership is associated with. Generally the interviewees think that the union, to increase the personal benefits, should be more present in the working place and that they should work more intensively to improve the work environment, workplace safety and job security. The union is not considered to offer personal safety to the extent they ought to. The protection that is requested stretch from qualified support in labour law negotiations to a secure and steady income in case of unemployment or sickness. / Den fackliga organisationsgraden har kontinuerligt minskat sedan mitten av 1990-talet. Uppsatsens syfte är att undersöka fackligt oorganiserades förhållningssätt till facket. Centrala frågor är vilka personliga erfarenheter respondenterna har av facket samt vilken syn de har på facket som fenomen. Enligt tidigare forskning är de höjda egenavgifterna till a-kassorna och de stigande medlemsavgifterna till fackförbunden kring 2007 den främsta orsaken till medlemsraset inom LO. De ökade avgifterna ledde till en ökad ackumulerad kostnad för de som både var fack- och a-kassemedlemmar, vilket påverkade medlemsantalet negativt för facket. Denna studie baseras på kvalitativa intervjuer med tre fackligt oorganiserade personer inom IF Metalls avtalsområde och tre inom Kommunals. I tolkningen av det empiriska materialet använder vi oss av Max Webers teori om sociala handlingstyper. Vår studie visar att medlemskostnaden spelar en viktig roll i beslutet att avstå medlemskap men att den upplevda personliga nyttan med medlemskap är ännu mer avgörande. Intervjupersonerna anser generellt att facket, för att öka den personliga nyttan, skulle behöva vara mer närvarande ute på arbetsplatserna och ta mer kamp för en förbättrad fysisk och psykosocial arbetsmiljö och anställningstrygghet. Facket anses inte heller i tillräcklig grad ge det personliga skydd som det borde till medlemmarna. Skyddet de efterfrågar kan handla om allt från ett kvalificerat stöd i arbetsrättsliga förhandlingar till en tryggad inkomst vid arbetslöshet och sjukdom.

中國新上市公司（Initial Public Offerings，以下簡稱IPO）上市後經營績效大幅衰退之現象時有所聞，IPO績效變化不僅影響投資者的利益，也攸關轉型經濟過程中，中國證券市場能否有效引導社會資源的配置。本研究調查2001年至2005年間，在中國深圳以及上海交易所A股市場IPO公司經營績效變化以及可能原因，延伸討論保薦制度及政治關聯對前述現象的影響。首先測試樣本公司上市前後經營績效之差異，並調整同業平均數。實證結果指出，上市後兩年ROA及ROE(無論是否調整產業因素)皆不如上市前兩年，杜邦分析發現獲利能力衰退是造成財務績效衰退的主因。 保薦制度於2004年2月1日正式施行，藉由提升保薦人及保薦機構的執業水準，以建立市場約束機制。本研究依保薦制度實施及政治關聯分別分組，採用分群組T檢定與Wilcoxon做差異分析。實證結果顯示保薦制度下IPO公司上市前的各項財務績效較佳，顯示其能篩選體質較好公司上市；而上市後績效衰退的情形也較為趨緩，中介機構制衡機制有所發揮。政治關聯度低的低國有股公司在上市前的各項財務績效指標較高國有股公司好，推論政治關聯可能影響上市機會，使其上市前需極大化自身績效；相對而言，上市後較難維持績效。 進一步分析績效衰退原因，本研究比較各期間IPO公司各項應計數變化。實證結果顯示。整體而言上市後總應計、流動應計數、營業相關應計數以IPO當年呈倒V型，有上市後反轉的現象，並與經營活動現金流量變動呈反向變動，推論與盈餘操縱有關；保薦制度的在應計數反轉現象沒有顯著抑止效果，而政治關聯度低的IPO公司亦沒有顯著操縱應計數的現象以極大化上市前經營績效。最後，代理問題探討中結果顯示，董監持股變動以及大股東持股變動與績效衰退顯著相關，符合利益一致假說。 / The article investigates whether there is a significant change in financial performance of firms after they went to public for the period between 2001 and 2005 in China A –share market. First, we use ROA and ROE as main performance index. The results indicate a significant decline in ROA and ROE. Following Du Pont framework, return on sales is the most important reason about the decline. Second, we find under new Sponsor’s System, IPO firms had better perfomanace before they went public and they suffered less declined after IPO. We also find the low political connection firms maximize financial performance before they went public to win the IPO opportunity, and they hardly maintain operating performance. At last, we examine the reason for financial performance decline. We compared the change between accruals and operating cashflow the period of IPO for inspecting wether earnings management existed. The empirical results indicate IPO firms maximize accruls when IPO.This study also indicates a significant correlation between post-IPO performance and agency problem.