This paper examines the impact of elections on firm dynamics. We investigate how electoral cycles affect the total number of firms, firm entries, and firm exits using a comprehensive dataset covering 132 countries from 2006 to 2022. Our findings indicate that elections do not significantly impact the total number of firms or firm creation. However, we document a reduction in firm exits during election years and the subsequent post-election period, particularly in democratic countries. This suggests that incumbent governments may engage in economic manipulation to stabilize economic conditions and minimize business closures around elections. The absence of a corresponding increase in firm entries highlights the asymmetric political incentives favoring short-term economic stability over long-term entrepreneurial activity.
