The Economic Benefits of Political Connections in Late Victorian Britain

Abstract

The late Victorian era was characterized by close links between politicians and firms in the United Kingdom, with up to half of all members of Parliament serving as company directors. We analyze 467 British companies over the period 1895 to 1904. An analysis of election results shows that the election of a new tech director is associated with a 2 percent to 2.5 percent increase in that firm's share price, whereas old tech firms were unaffected by the electoral fortunes of their directors. New technology firms with political directors were more likely to undertake seasoned issues of both equity and debt.