Exposing the Revolving Door in Executive Branch Agencies

52 Pages Posted: 28 Jan 2021 Last revised: 22 Feb 2022

See all articles by Logan P. Emery

Logan P. Emery

Rotterdam School of Management, Erasmus University

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: February 22, 2022

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 firms. The phenomenon is highly prevalent, present in one out of every three public firms. Consistent with the “knowledge” hypothesis of the revolving door, we show that transitions within three years of leaving an agency tend to occur in response to increases in regulatory activity and tend to coincide with an abnormally high incidence of fines. Transitions also tend to be followed by benefits in the form of an increased incidence of procurement contracts. We find no evidence that contract execution worsens following the appointment of former regulators. Overall, our large-scale results support the view that the average firm appoints former regulators for their knowledge and expertise.

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 (February 22, 2022). Available at SSRN: https://ssrn.com/abstract=3732484 or http://dx.doi.org/10.2139/ssrn.3732484

Logan Emery

Rotterdam School of Management, Erasmus University ( email )

RSM Erasmus University
PO Box 1738
Rotterdam, 3062 PA
Netherlands

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 )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

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Belgium

HOME PAGE: http://www.ecgi.org

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

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Singapore, 117592
Singapore

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