To Share Is To Keep: Politicians,Property Rights and Firm Ownership in Post-Apartheid South Africa.

详细信息   

• 作者：Santos Villagran ; Rafael J.
• 学历：Doctor
• 年：2013
• 毕业院校：Yale University
• Department：Economics.
• ISBN：9781303316609
• CBH：3571843
• Country：USA
• 语种：English
• FileSize：5016646
• Pages：113

文摘

Institutions that fail to protect citizens against expropriation from the government hinder investment and economic development. How do economic agents counteract these institutions? I propose a theory of companies establishing connections with politicians as a mechanism to protect property rights and increase investment. I build a model in which N companies face a sector-level threat of expropriation. As a response to that threat,the owner of each company non-cooperatively decides what fraction of her shares to transfer to a politician who is pivotal in the expropriation decisions of the government. The model predicts that an exogenous shift in the share transfers of company i increases that companys investment by reducing the sector-level risk of expropriation. This,in turn,generates a sector-level positive externality which indirectly increases investment of other companies in companys i sector. The predictions of the model are examined using new panel data for South Africa between 1971 and 2003 for 123 listed companies. After Apartheid,a leftist party,which historically promoted the nationalization of the mines and banks of the country,came to power and increased the political insecurity of white-owned firms. At the same time,the first instances of Black Economic Empowerment occurred,whereby white firms transferred shares to black people at preferential terms. I examine the effects of BEE transactions on investment to test the model that I developed above. After showing that most BEE transactions went to companies directed by black politicians,I use an interaction between a post-Apartheid dummy and the size of the second largest shareholder as an instrument for BEE transactions. This instrument satisfies the exclusion restriction in the economic model outlined above and it is relevant because it sets an upper bound for the amount of her own shares that the owner can transfer to politicians without ceding control to the second largest shareholder. The larger the latter,the less shares are transferred to politicians. I first confirm that the size of the second largest shareholder has a large negative effect on BEE transactions. I then show that an increase in BEE transactions both at the company level and at the sector level increases long-term investments and that these effects are only relevant for companies in the mining and financial sectors. Finally,I show that firms which engaged in more BEE transactions up to 2003 are more likely to have ANC Ministers and Members of Parliament as shareholders in 2006,but again this relationship is only relevant for firms in the mining and financial sector.