Analyzing over 1.1 million corporate assets, I find that politically connected firms are significantly more likely to incur damage to their physical assets during social protests, compared to similar assets of unconnected firms located within the same municipal district. Conditional on sustaining damage during protests, the extent of damage to assets of connected firms is also greater. Additionally, I find that during protests, connected firms obscure their government ties by having their connected corporate officers remove their resumes from Google search results or edit their resumes, potentially to downplay their past government employment. Lastly, the paper documents that connected firms, even those undamaged during protests, often cut political ties afterward, evidenced by a significant increase in the likelihood of involuntary turnover among their connected officers within a year, a pattern that persists even in within-firm estimations. Overall, my findings underscore the ex-post costs associated with corporate political connections, an area that has remained underexplored in the literature.
with Ankit Kalda
Despite evidence on the benefits of banking relationships for firms, it has remained unclear how firms form such relationships. Analyzing a proprietary dataset of corporate loans matched to a database of resumes, we find that firms without a borrowing history hire commercial bankers and improve their prospects of obtaining a first bank loan. This first bank loan, on average, marks the start of a banking relationship that persists even beyond the hired banker's tenure at the firm. Exploiting variation in loans issued to the same firm by different branches of the same lender within the same calendar year, our findings show that having a former banker on staff is associated with a higher likelihood of receiving a loan, larger loans, and lower spreads from the branch where the hired banker had previously worked. Further analysis indicates that the key mechanism at play is the mitigation of information frictions, likely achieved by capitalizing on the mutual trust and interpersonal ties between the hired banker and their former colleagues at the lending institution. The loans to firms employing a lender's former employee are significantly less likely to become delinquent, compared to similar-term loans issued by the same branch within the same calendar year.
with Kristoph Kleiner
This study documents empirical evidence that, despite an expansion in aggregate credit prior to elections, bank lending to finance automation technologies significantly contracts during these periods. Analyzing over 0.2 million corporate loans, we find that the likelihood of a bank loan origination for automation technologies is 25.2 percent lower in election years in constituencies where the incumbent politician is seeking reelection and facing electoral competition. Conditional upon issuance, the interest rate of bank loans that finance automation technologies is, on average, 40.4 basis points higher in treated constituencies during election years. These findings suggest that politically motivated bank lending may distort technology adoption decisions, revealing a mechanism hitherto unexplored through which political business cycles hamper economic growth.
This study examines the relationship between corporate ESG activities and individual prosocial behavior, finding evidence that they are partial substitutes. Studying personal charitable contributions, I find that entrepreneurs who successfully raise funds for their ESG project donate significantly less to non-religious causes the following year compared to those whose ESG project fails to raise enough funds. I rule out the possibility of budget constraints as a potential explanation by showing that no substitution occurs when a non-ESG project is successfully funded.
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