Publication Type
Working Paper
Version
submittedVersion
Publication Date
3-2015
Abstract
Using the regression discontinuity design of close gubernatorial elections in the U.S., we identify a significant and positive impact of the social networks of corporate directors and politicians on firm value. Firms connected to elected governors increase their value by 3.89%. Political connections are more valuable for firms connected to winning challengers, for smaller and financially dependent firms, in more corrupt states, in states of connected firms’ headquarters and operations, and in closer, smaller, and active networks. Post-election, firms connected to the winner receive significantly more state procurement contracts and invest more than do firms connected to the loser.
Keywords
Political connection, firm value, social networks, close gubernatorial election, regression discontinuity design, corruption, procurement
Discipline
American Politics | Corporate Finance
Research Areas
Finance
First Page
1
Last Page
54
Citation
DO, Quoc-Anh; LEE, Yen Teik; and NGUYEN, Bang D..
Political connections and firm value: Evidence from the regression discontinuity design of close gubernatorial elections. (2015). 1-54.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5662
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://ssrn.com/abstract=2023191