Bringing Connections Onboard: The Value of Political Influence

Arbeitspapier

In 2002, an amendment to UK parliamentary regulations removed restrictions on the participation of members of parliament (MPs) in parliamentary proceedings related to their corporate interests. Using this amendment as a quasi-natural experiment, we demonstrate gains in firm value and profitability for firms with prior connections to MPs. These benefits are higher for firms with family ownership and lower accounting transparency. Both firms and politicians to change their behaviour. Post-amendment, firms are more likely to appoint MPs and also reduce political donations. Politicians with corporate connections were more likely to both become members of, and conditional on this, attend meetings of parliamentary select and joint committee. Our results highlight mechanisms of returns from political influence in well-developed institutional contexts.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 13392

Classification and Topics

• Classification: Wirtschaft ; Information and Market Efficiency; Event Studies; Insider Trading ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; General Financial Markets: Government Policy and Regulation ; Corporate Finance and Governance: General
• Subject: political connections ; board of directors ; firm value

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Green, Colin P. ; HomRoy, Swarnodeep
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/223834
• Last update: 10.03.2025, 11:43 AM CET