Politically connected companies are less likely to shutdown due to COVID-19 restrictions.

We show that businesses with political connections to government officials were significantly less likely to shut down as a result of COVID-19 policies. This finding suggests that measures designed to mitigate COVID-19 are ineffective in countries with a weak rule of law if politically connected firms are able to circumvent restrictions by leveraging political connections to receive preferential treatment. In addition, politically connected firms are no more likely-and sometimes even less likely-to engage in social-distancing policies to mitigate the pandemic despite the fact that they are more likely to remain open.