The politics of government financial management: Evidence from state bonds

• 成果类型: Article
• 署名作者: Brown, Craig O.
• 署名单位: Northeastern University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2017.07.006
• 发表日期: 2017
• 页码: 158-175
• 关键词: Government financial management; Security issuance; Underpricing; Campaign Contributions

摘要

In the $3.7 trillion U.S. state-and-local-government-bond market, greater issuance costs (lower issue-prices and greater underwriting fees) benefit financial institutions, while costing taxpayers. Campaign contributions by politically supportive underwriters can be associated with lower issuance costs. Alternatively, contributions can influence a politician to accept greater costs. This paper's evidence suggests that contributions influence politicians: In the absence of an underwriter auction, underpricing increases with the chosen underwriter's contributions relative to others. Moreover, the difference in the fees charged by contributing underwriters and those charged by non-contributing underwriters is 2.9%. In the presence of an underwriter auction, these results are statistically insignificant. (C) 2017 Elsevier B.V. All rights reserved.