Political Connections and Allocative Distortions

• 成果类型: Article
• 署名作者: Schoenherr, David
• 署名单位: Princeton University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12751
• 发表日期: 2019
• 页码: 543-586
• 关键词: Random assignment; procurement; networks; STOCK; performance; Managers; policies; finance; friends; boards

摘要

Exploiting a unique institutional setting in Korea, this paper documents that politicians can increase the amount of government resources allocated through their social networks to the benefit of private firms connected to these networks. After winning the election, the new president appoints members of his networks as CEOs of state-owned firms that act as intermediaries in allocating government contracts to private firms. In turn, these state firms allocate significantly more procurement contracts to private firms with a CEO from the same network. Contracts allocated to connected private firms are executed systematically worse and exhibit more frequent cost increases through renegotiations.