We examine the use of proxies, shell companies, and offshore firms to defend property against seizure by private and state actors. Our theoretical framework emphasizes the role of political connections in defensive ownership. Linking information from investigative journalists on the key holdings of numerous Ukrainian oligarchs with firm-level administrative data on formal ownership ties, we observe some form of defensive ownership among more than two-thirds of oligarch-controlled firms, but such conduct is much less common for those connected to the incumbent regime. Further exploiting the abrupt shock to political connections that accompanied the Orange Revolution, we find a sharp rise in defensive ownership among previously connected oligarchs.
The Oligarch Vanishes: Defensive Ownership, Property Rights, and Political Connections Available to Purchase
Author order random: https://www.aeaweb.org/journals/policies/random-author-order/search?RandomAuthorsSearch%5Bsearch%5D=MsTzQvAcBCzl. The National Science Foundation provided primary support for this project through Grant No. 1559197 on “Political Connections and Firm Behavior.” Earle and Shpak acknowledge additional support from a GMU Provost Grant for Multidisciplinary Research, and Gehlbach and Shirikov acknowledge additional support from the Office of the Provost, the Office of the Vice Chancellor for Research and Graduate Education, and the Center for Russia, East Europe, and Central Asia at UW Madison. We also thank Volodymyr Vakhitov for advice on the data, Serhiy Leshchenko for guidance on coding political connections, and Abraham Song for assistance in coding oligarch ownership. For comments, we thank Anders Åslund, Chris Blattman, Scott de Marchi, Oeindrila Dube, Vladimir Gel’man, Kathie Hendley, Eddy Malesky, Tymofiy Mylovanov, Monika Nalepa, Russell Pittman, Michael Poyker, Will Pyle, Graeme Robertson, David Samuels, Sergey Sanovich, Kristina Sargent, Georg Vanberg, and participants in numerous seminars and conferences.
Earle JS, Shpak S, Shirikov A, Gehlbach* S (2022), "The Oligarch Vanishes: Defensive Ownership, Property Rights, and Political Connections". Quarterly Journal of Political Science, Vol. 17 No. 4 pp. 513–546, doi: https://doi.org/10.1561/100.00020228
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