Structure of Local Political Power and Family Firms’ Concentration of Wealth

Wealth concentration is a common problem worldwide, and research reveals that wealth is most concentrated in family firm holdings. We examined the influence of local political structure on the concentration of family firm wealth and found that (a) changes in de jure political power (provincial party secretary turnover) temporarily inhibit family firm wealth concentration, (b) local de facto power offers strong countervailing protection against this effect, and (c) there is a U-shaped relationship between the tenure of the provincial party secretary and wealth concentration. This investigation deepens our understanding of the relationship between family firm political connections and wealth concentration.