Using new indicators capturing the degree of financial liberalization in OECD countries, we examine whether partisan political differences have important
effects on financial reforms since the early 1970s. Applying regressions on a sample of 18 OECD countries from 1970 to 2009, we find that right-wing
governments liberalize more the financial sector than left-wing governments.
To estimate the impact of the government partisan affiliation on the corporate governance legislation, we use a probit model and a conditional Cox model in gap time in 16 OECD over the 1970-2009 period. Statistically, we find that right-wing governments enhance more pro-shareholder policies. The partisan hypothesis is based on the analysis of the political preferences of different social groups: then, governments have to implement policies corresponding to these preferences. Nevertheless, the decision of a government also depends on the international environment. For this reason, following the compensation hypothesis, if a left-wing government accepts to liberalize the financial sector, an increase of social security expenditures can facilitate the adoption of a new legislation in the financial sector. This paper thus reveals that a strong political differentiation still remains in the field of social policy.
