The role of stock ownership by US members of Congress on the market for political favors

• 成果类型: Article
• 署名作者: Tahoun, Ahmed
• 署名单位: University of London; London Business School
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2013.10.008
• 发表日期: 2014
• 页码: 86-110
• 关键词: portfolio choice; Politics of financial markets; government contracts; Politicians-firms relation; Investment by politicians

摘要

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. (C) 2013 Elsevier B.V. All rights reserved.