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30 Const. Pol. Econ. 1 (2019)

handle is hein.journals/constpe30 and id is 1 raw text is: Constitutional Political Economy (2019) 30:1-30 https://doi.org/1 0.1007/s10602-019-09274-6 ORIGINAL PAPER Electoral systems and the economy: a firm-level analysis Isa Camyarl - Bahar Ulupinar2 Published online: 22 January 2019 © Springer Science+Business Media, LLC, part of Springer Nature 2019 Abstract Prior research presents mixed results for electoral impact on economic performance, thereby raising the question of whether electoral systems matter economically at all. We argue that electoral systems can conceivably generate a robust economic impact at the firm level. This argument is grounded in a recent scholarship on the political economy of corporate governance. Analysts discern electoral systems as a significant determinant of a country's corporate governance regime and its two central components: investor and employment protection. Building on a wealth of research relating investor and employment protection to firms' economic behavior, we develop the hypothesis that firm performance is stronger under plurality-major- itarian rules than under proportional rules. Our panel study of firms in 21 advanced democracies from 1989 to 2007 supports our hypothesis. Overall, this research helps to fill in an important gap in understanding of why it matters to choose one electoral system over another. Keywords Political economy - Institutions - Corporate governance - Firms- Economic performance JEL Classification G30 -G38 1 Introduction Electoral systems are a central feature of modern democratic constitution. But, does the choice of electoral systems make a difference in economic outcomes? The nas- cent literature on this question yields mixed results, thereby generating considerable E Isa Camyar icamyar@sfc.edu Bahar Ulupinar bulupinar@wcupa.edu Political Science, St. Francis College, 180 Remsen Street, Brooklyn, NY, USA 2 Economics and Finance, West Chester University of Pennsylvania, 304 Anderson Hall, West Chester, PA, USA I_) Springer