Summary of The Relationship Between Political Connections and the Financial Performance of Industries and Firms

Mercatus Center,

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The Relationship Between Political Connections and the Financial Performance of Industries and Firms summary
Top executives of politically influential firms earn more than their peers at companies that spend less on lobbying.

Rating

7 Overall

7 Importance

8 Innovation

7 Style

Recommendation

Crony capitalism might be worse than you think. This eye-opening study from the conservative Mercatus Center says corporations that drop big bucks on lobbyists are no more profitable than firms that spend less to build political clout. But economic researchers Russell S. Sobel and Rachel L. Graefe-Anderson conclude that top executives of politically influential companies earn more than their peers at firms that lobby less actively. Alas, disappointment looms for readers hoping that the authors will name names; they don’t proffer a list of which executives at which crony companies make the most. Nevertheless, getAbstract recommends this report for its findings on who really benefits from government subsidies.

In this summary, you will learn

  • How political expenditures affect company success
  • How lobbying budgets influence executive compensation
 

Summary

US firms spend billions lobbying federal officials, an outpouring that raises a critical question: Has the American economy turned into a paragon of crony capitalism, a place where political connections are more crucial to a company’s success than its ability to satisfy customers? That query gained ...
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About the Authors

Russell S. Sobel is an economist and a visiting scholar at The Citadel, South Carolina. Rachel L. Graefe-Anderson is an assistant professor of business at the University of Mary Washington, Virginia.


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