The Effect of Political Ties on Firms Performance and Value: Evidence from Russian Companies

Politically connected companies are widely discussed in Russian media. Political affiliation can lead to both positive and negative consequences for independent shareholder and other stakeholders. In any case political affiliation can lead to the situation that not economic factors can influence on shareholder welfare. Russia is recognized as a country with high involvement of state in national economy. So political connections could play important role in company performance. This master thesis tests whether political connections influence company performance in Russia and in what form it may result. Companies were divided into two groups – new companies that were set up in Russia and companies that existed from Soviet times. Results show that political connections have statistically significant effect at company performance. Different scale of effects from political connections among covered companies can be partly explained by company origin.