Managerial Finance
• 2026
Money and muscle: corporate political power and government subsidies
Reza Houston, Stephen P. Ferris, Blake Rayfield
Corporate Finance
Political Connections
Research Overview
The authors develop a firm-level measure of political power using connections to legislators through political action committee contributions. They distinguish local and national political power and examine subsequent government subsidy awards. The results indicate that changes in political power affect future subsidies, with greater political power associated with larger awards.
Plain-English Summary
The study measures firms' political connections and investigates how changes in political power relate to government subsidies. Firms with greater political power receive larger subsidies at federal, state, and local levels.