Mini West Virginias: Corporations as Government Dependents
34 Pages Posted: 7 Apr 2016
Date Written: April 4, 2016
Much like states that rely on government spending, certain firms rely on the government for a substantial share of their revenues. Exploiting the statutory requirement that forces firms to list the identities of their major customers, we identify and examine the set of firms whose major customers are listed as government entities. We employ an identification strategy that exploits government contract bid protests in order to identify the causal impact of government sales on future firm outcomes, and find that government-linked firms invest less in physical and intellectual capital, and have lower future sales growth.
Keywords: Government Spending, Customers, Investment, R&D
JEL Classification: E13, E62, G31
Suggested Citation: Suggested Citation