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Individual political contributions and firm performance

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  • Ovtchinnikov, Alexei V.
  • Pantaleoni, Eva

Abstract

We present evidence that individuals make political contributions strategically by targeting politicians with power to affect their economic well-being. Individuals in Congressional districts with greater industry clustering choose to support politicians with jurisdiction over the industry. Importantly, individual political contributions are associated with improvements in operating performance of firms in industry clusters. The relation between contributions and firm performance is strongest for poorly performing firms, firms closer to financial distress, and for contributions in close elections. The results imply that individual political contributions are valuable to firms, especially during bad economic times.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Economics.

Volume (Year): 105 (2012)
Issue (Month): 2 ()
Pages: 367-392

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Handle: RePEc:eee:jfinec:v:105:y:2012:i:2:p:367-392

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Web page: http://www.elsevier.com/locate/inca/505576

Related research

Keywords: Political contributions; Firm performance; Firm value;

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References

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Cited by:
  1. Bonaparte, Yosef & Kumar, Alok, 2013. "Political activism, information costs, and stock market participation," Journal of Financial Economics, Elsevier, vol. 107(3), pages 760-786.
  2. Adam Fremeth & Brian Kelleher Richter & Brandon Schaufele, 2013. "Campaign Contributions over CEOs' Careers," American Economic Journal: Applied Economics, American Economic Association, vol. 5(3), pages 170-88, July.

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