Political Influence and the Renegotiation of Government Contracts

• 成果类型: Article
• 署名作者: Brogaard, Jonathan; Denes, Matthew; Duchin, Ran
• 署名单位: Utah System of Higher Education; University of Utah; Carnegie Mellon University; Boston College
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa093
• 发表日期: 2021
• 页码: 3095
• 关键词: Adverse selection; procurement; DESIGN; STOCK; connections; OWNERSHIP

摘要

This paper provides novel evidence that corporate political influence operates through renegotiations of existing government contracts. Using detailed data on contractual terms and renegotiations around sudden deaths and resignations of local politicians, the estimates show that politically connected firms initially bid low and successfully renegotiate contract amounts, deadlines, and incentives. The effects hold across different industries and contract types, enhance firm value, and persist around the exogenous increase in contract supply due to the American Recovery and Reinvestment Act. Overall, this paper establishes an unexplored link between political influence, ex post renegotiations, and ex ante bidding of government contracts.