The Value of Corporate Political Connections: Evidence from Sudden Deaths

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.

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