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Unbundling the Relationship between Authoritarian Legislatures and Political Risk

Published online by Cambridge University Press:  10 April 2013

Nathan M. Jensen ,
Edmund Malesky  and
Stephen Weymouth
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Abstract

A strong statistical association between legislative opposition in authoritarian regimes and investment has been interpreted as evidence that authoritarian legislatures constrain executive decisions and reduce the threat of expropriation. Although the empirical relationship is robust, scholars have not provided systematic evidence that authoritarian parliaments are able to restrain the actions of state leaders, reverse activities they disagree with, or remove authoritarian leaders who violate the implied power-sharing arrangement. This article shows that authoritarian legislatures, by providing a forum for horse trading between private actors, are better at generating corporate governance legislation that protects investors from corporate insiders than they are at preventing expropriation by governments. The statistical analysis reveals that the strength of authoritarian legislatures is associated with corporate governance rules and not expropriation risk.

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Articles
Information
British Journal of Political Science , Volume 44 , Issue 3 , July 2014 , pp. 655 - 684
Copyright
Copyright © Cambridge University Press 2013 

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Footnotes

*

Department of Political Science, Washington University; Department of Political Science, Duke University (email: [email protected]), and McDonough School of Business, Georgetown University. The authors thank Joe Wright and Jennifer Gandhi for sharing their data, and also the participants at numerous workshops and conferences including the Political Economy Lunch Group at Georgetown University and the Texas A&M Program on International Conflict and Cooperation for helpful comments. Funding for the political risk insurance data collection was provided by the Weidenbaum Center on the Government Economy and Public Policy at Washington University in St. Louis. An online appendix and data replication set are available at http://dx.doi.org/doi:10.1017/S0007123412000774.

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