The Peer Effects in Government Contracting

49 Pages Posted: 4 Sep 2021

See all articles by Jason Damm

Jason Damm

University of Miami

David Javakhadze

Florida Atlantic University

Chris He

Florida Atlantic University

Date Written: May 1, 2021

Abstract

We examine the extent to which peer effects explain corporate government contracting. From the observational learning perspective, managers rationally mimic the behavior of peer firms to benefit shareholders. Using a sample of U.S. firms for the period 2002-2017, we provide the first direct empirical evidence of peer effects in the procurement of government contracts. Peer firms also influence the appeal for sweetheart provisions included in awarded contracts. Finally, peer-effects-induced government contracting matters for investment efficiency and long-term performance. Our results are robust to adjustments for possible endogeneity.

Keywords: Government suppliers, Government contracts, Peer effects

JEL Classification: D22, G39, H57

Suggested Citation

Damm, Jason and Javakhadze, David and He, Chris, The Peer Effects in Government Contracting (May 1, 2021). Available at SSRN: https://ssrn.com/abstract=3916524 or http://dx.doi.org/10.2139/ssrn.3916524

Jason Damm (Contact Author)

University of Miami ( email )

5250 University Drive
Coral Gables, FL 33146
United States
(941) 587-9425 (Phone)

David Javakhadze

Florida Atlantic University ( email )

College of Busines
777 Glades Road
Boca Raton, FL 33433
United States
561-297-2914 (Phone)

Chris He

Florida Atlantic University ( email )

Boca Raton, FL 33431
United States

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