The role of stock ownership by US members of Congress on the market for political favors |
| |
| Institution: | 1. Department of Banking and Finance, University of Zurich, Switzerland;2. Swiss Finance Institute (SFI), Switzerland;1. Stanford University, Graduate School of Business, United States;2. MIT Sloan School of Management, United States;3. NBER, United States;1. Duke University, 100 Fuqua Drive, Durham, NC 27708, USA;2. Rutgers University, USA;1. Binghamton University, United States;2. CEPR, United Kingdom;3. Loyola Marymount University, United States;4. Graduate School of Business, Stanford University, 655 Knight Way, Stanford, CA 94305, United States;5. NBER, United States;1. Institute of Accounting and Control, University of Graz, Austria;2. Department of Accounting, Vrije Universiteit Amsterdam, The Netherlands;3. Muma College of Business, University of South Florida, United States;4. School of Management, University of Bath, Claverton Down, Bath BA2 7AY, United Kingdom |
| |
| Abstract: | I examine whether stock ownership by politicians helps to enforce noncontractible quid pro quo relations with firms. The ownership by US Congress members in firms contributing to their election campaigns is higher than in noncontributors. This bias toward contributors depends on the financial incentives of politicians and the relation's value. Firms with a stronger ownership–contribution association receive more government contracts. The financial gains from these contracts are economically large. When politicians divest stocks, firms discontinue contributions to the politicians, lose future contracts, and perform poorly. Politicians divest the stocks in contributors, but not in noncontributors, in anticipation of retirement. |
| |
| Keywords: | Portfolio choice Politics of financial markets Government contracts Politicians–firms relation Investment by politicians |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
