The Value of Corporate Political Connections: Evidence from Sudden Deaths
11 Pages Posted: 21 Sep 2017 Last revised: 9 Sep 2018
Date Written: September 1, 2018
We present new causal estimates of firm-value benefits generated by political connections. Our identification strategy uses sudden deaths of U.S. Representatives and Senators as a source of exogenous variation. We find that firms contributing to the deceased politicians lose, on average, 0.60% of their equity value within one week after the politician’s death. Our results support the notion that campaign contributions to political candidates may serve as a useful measure of firms’ political connections.
Keywords: firm value, political connections, campaign contributions, political activism, PACs, sudden deaths, natural experiment
JEL Classification: D72, G38, H89, P16
Suggested Citation: Suggested Citation