Politically+connected+governments-av.pdf (924.54 kB)

Politically connected governments

Download (924.54 kB)
journal contribution
posted on 30.03.2021, 12:39 by Christine CUNY, Jungbae Kim, Mihir Mehta

This paper examines the consequences of powerful political connections for local governments. We find that governments located within the constituencies of, and thus connected to, powerful congressional members reduce their stewardship over public resources. Using plausibly exogenous declines in the power of congressional representation, we show that the effect is causal. To better understand why connected local governments can reduce stewardship, we study electoral characteristics. Our findings suggest that the increased resources that come with powerful congressional representation allow local‐government officials to reduce stewardship without material adverse effects on their reelection prospects. In sum, we provide evidence of a cost of political connections: they weaken local governments' incentives to act in a socially optimal manner.

History

Publication Date

15/09/2020

Journal

Journal of Accounting Research

Volume

58

Issue

4

Pages

915-952

ISSN

0021-8456

IRIS ID

138023004

Exports

Publications

Exports