First, the concentrated decision rights within the firms allow them to operate in greater secrecy. A politician may desire more secrecy in order to maintain a reputation of integrity. The firms also prefer operating in secret in order to discourage entry by competitors. Second, compared to a hired manager in a widely held firm, a controlling owner is more secure in his position in the firm and thus has more credibility on which to trade favors with the government. In order to trade favors with politicians and bureaucrats in secret, firms generally have highly concentrated ownership that allows them to have tight control of information flows to the.
