Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282448 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10760
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Does higher office always lead to more favoritism? We argue that firms may lose their benefit from a connected politicians ascent to higher office, if it entails stricter scrutiny that may reduce favoritism. Around close Congress elections, we find RDD-based evidence of this adverse effect that a politicians win reduces his former classmates firms stock value by 3.2% after a week. Exploiting the entry of Craigslist across the U.S., we find that state-level scrutiny drives this effect. It further varies with politicians power, firm size and governance, and connection strength, and diminishes as a politicians career concern fades over time.
Subjects: 
favoritism
power
scrutiny
political connection
congressmen
close election
RDD
JEL: 
D72
D73
D85
G14
G32
Document Type: 
Working Paper
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