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Presidential Particularism (and the Trump Anomaly): Evidence from Federal Contract Awards and Capital Markets

Author

Listed:
  • Ling Cen
  • Sudipto Dasgupta
  • Anthony Rice
  • Fan Zhang

Abstract

We document presidential particularism in the allocation of U.S. federal government contracts. Firms in “Swing” and “Core” states receive disproportionately higher federal contracts during election cycles. Contracts peak in reelection years for incumbent presidents suggesting electoral and partisan motives. Awards to “Core” states fall relative to “Hostile” states in election years of the presidents’ second terms. Government agencies engage more aggressively in particularism when aligned with the president’s party. Particularism disappeared during the Trump presidency, with Hostile-state firms awarded more contracts. Market participants, who are slow to recognize the relationship between particularism and corporate earning, underreact to this phenomenon.

Suggested Citation

  • Ling Cen & Sudipto Dasgupta & Anthony Rice & Fan Zhang, 2025. "Presidential Particularism (and the Trump Anomaly): Evidence from Federal Contract Awards and Capital Markets," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 14(4), pages 1024-1057.
    • Handle: RePEc:oup:rcorpf:v:14:y:2025:i:4:p:1024-1057.
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    File URL: http://hdl.handle.net/10.1093/rcfs/cfaf015
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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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