Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86430
Authors: 
Claessens, Stijn
Feijen, Erik
Laeven, Luc
Year of Publication: 
2006
Series/Report no.: 
Tinbergen Institute Discussion Paper 06-002/2
Abstract: 
This paper provides empirical evidence that campaign contributions arestrongly associated with market expectations of future firm-specific political favors,including preferential access to external financing. Using a novel dataset, we find thatfirms in Brazil providing contributions in the 1998 campaign to (elected) federal deputiesexperienced higher stock returns following the election, even after controlling forindustry-specific effects and firm-specific controls. This suggests that federal deputieswere expected to shape policy to benefit these firms in particular. Consistent with suchpolitical favors, we find that these firms relative to a control group substantially increasedtheir financial leverage in the four years following election, suggesting that contributionsgained firms preferential access to finance.
Subjects: 
Campaign Contributions
Elections
Corruption
Preferential Lending
JEL: 
D7
G1
G2
G3
P48
Document Type: 
Working Paper

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