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Corporate Influence and Political Corruption: Lessons from Stock Market Reactions to Political Events

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Abstract

Stock market reactions to political events demonstrate that the value of some firms is strongly affected by which party controls political power. However, contrary to common perception, event studies do not indicate that the ability to make unlimited political contributions or expenditures enhances a firm's value. Instead, geographic and personal connections to political actors matter more for firms' bottom line, although there is some evidence that personal connections may be rented via professional lobbying.

Suggested Citation

  • Jeffrey Milyo, 2013. "Corporate Influence and Political Corruption: Lessons from Stock Market Reactions to Political Events," Working Papers 1323, Department of Economics, University of Missouri.
    • Handle: RePEc:umc:wpaper:1323
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    Cited by:

    1. Christopher Coyne & Lotta Moberg, 2015. "The political economy of state-provided targeted benefits," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 28(3), pages 337-356, September.

    More about this item

    Keywords

    Campaign Contributions; Corruption; Event Studies; Lobbying;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H0 - Public Economics - - General
    • K0 - Law and Economics - - General
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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