Abstract

http://ssrn.com/abstract=1571974
 
 

References (59)



 
 

Citations (4)



 


 



The Role of Stock Ownership by US Members of Congress on the Market for Political Favors


Ahmed Tahoun


London Business School

February 28, 2011

AFA 2011 Denver Meetings Paper

Abstract:     
I examine whether stock ownership by politicians helps to enforce noncontractible quid pro quo relations with firms. The ownership by US Congress members in firms contributing to their election campaigns is higher than in noncontributors. This bias toward contributors depends on the financial incentives of politicians and the relation’s value. Firms with a stronger ownership-contribution association receive more government contracts. The financial gains from these contracts are economically large. When politicians divest stocks, firms discontinue contributions to the politicians, lose future contracts, and perform poorly. Politicians divest the stocks in contributors, but not in noncontributors, in anticipation of retirement.

Number of Pages in PDF File: 81

Keywords: Portfolio choice; Politics of financial markets; Government contracts; Politicians–firms relation; Investment by politicians

JEL Classification: D72, G10, G11, G18, G38

working papers series


Download This Paper

Date posted: March 19, 2010 ; Last revised: January 30, 2014

Suggested Citation

Tahoun, Ahmed, The Role of Stock Ownership by US Members of Congress on the Market for Political Favors (February 28, 2011). AFA 2011 Denver Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1571974 or http://dx.doi.org/10.2139/ssrn.1571974

Contact Information

Ahmed Tahoun (Contact Author)
London Business School ( email )
Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom
Feedback to SSRN


Paper statistics
Abstract Views: 2,284
Downloads: 483
Download Rank: 30,328
References:  59
Citations:  4

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 1.781 seconds