Exposing the Revolving Door in Executive Branch Agencies

45 Pages Posted: 28 Jan 2021

See all articles by Logan P. Emery

Logan P. Emery

Purdue University - Department of Finance

Mara Faccio

Purdue University - Krannert School of Management; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Date Written: November 17, 2020

Abstract

We develop the first comprehensive mapping of the revolving door phenomenon in the U.S. by examining the work experience in executive branch agencies of 1,910,150 individuals covering top corporate positions in 373,011 unique firms. We document that the phenomenon is prevalent, with one out of every 15 firms, and one out of every three publicly traded firms, having at least one top employee with prior work experience in U.S. executive branch agencies. On average, former regulators are hired in response to or concomitant with increases in regulation as well as concomitant with more aggressive regulator behavior in the form of a higher incidence of fines. Firms headquartered in more corrupt states, firms seemingly more corruption-prone, and established violators receive benefits in the form of a reduction in the incidence of fines after hiring former regulators from fine-imposing agencies. In contrast, we do not observe other firms receiving benefits on average.

Keywords: The Revolving Doors; Transitions to Private Sector; Cheating

JEL Classification: G28; G38; J45

Suggested Citation

Emery, Logan and Faccio, Mara, Exposing the Revolving Door in Executive Branch Agencies (November 17, 2020). Available at SSRN: https://ssrn.com/abstract=3732484 or http://dx.doi.org/10.2139/ssrn.3732484

Logan Emery

Purdue University - Department of Finance ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
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Mara Faccio (Contact Author)

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

National Bureau of Economic Research (NBER) ( email )

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European Corporate Governance Institute (ECGI)

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National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

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