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PAC Contributions and Defense Contracting

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  • Tripathi Micky

    (Massachusetts Institute of Technology)

Abstract

This paper examines the political activity of US defense contractors over the years 1980-1994. Using econometric techniques to account for both fixed-effects and selection, I examine the industry determinants and distribution patterns of political action committee (PAC) contributions to the US House of Representatives. The analysis finds that the size of the defense budget is a primary factor explaining political activity across the industry as well as within individual firms; firm size, dependency on defense, and defense contract awards explain much less. I also find that firms appeared to change their political strategies in the face of large exogenous shifts in the US defense budget. While defense expenditures were on the rise, defense firms spread their contributions relatively broadly over the defense committee system; when the budget fell, however, the firms switched strategies and targeted committee leaders. An incidental contribution of the paper is an empirical application of the trimmed least absolute deviations estimator for fixed-effects models with selection.

Suggested Citation

  • Tripathi Micky, 2000. "PAC Contributions and Defense Contracting," Business and Politics, De Gruyter, vol. 2(1), pages 1-22, April.
    • Handle: RePEc:bpj:buspol:v:2:y:2000:i:1:n:4
    DOI: 10.2202/1469-3569.1003
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    Cited by:

    1. Christian Cox, 2020. "Campaign Contributions by Non‐profit Executives and Government Grants," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(4), pages 916-933, August.
    2. Klomp, Jeroen, 2023. "Political budget cycles in military expenditures: A meta-analysis," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 1083-1102.
    3. Hadani, Michael & Doh, Jonathan P. & Schneider, Marguerite, 2019. "Social movements and corporate political activity: Managerial responses to socially oriented shareholder activism," Journal of Business Research, Elsevier, vol. 95(C), pages 156-170.
    4. Klomp, Jeroen, 2023. "Defending election victory by attacking company revenues: The impact of elections on the international defense industry," European Journal of Political Economy, Elsevier, vol. 79(C).
    5. Stephen P. Ferris & Jan Hanousek & Reza Houston, 2022. "Contractor default: Predictions, politics, and penalties in the procurement process," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(4), pages 1001-1039, December.

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