Is Banning Corporate Contributions Enough? The Dynamics of Incomplete Campaign Finance Reform
Diego Aparicio and
Carlos F. Avenancio-León
Journal of Law and Economics, 2022, vol. 65, issue 3, 581 - 606
This paper studies whether banning corporate contributions suffices to curb firms’ efforts to influence politics. We examine Brazil’s 2015 campaign finance reform, which banned companies from making political contributions but did not ban political contributions made by individuals. Following the reform, overall contributions decreased significantly. However, this does not mean that influence in politics disappeared. Firms with high prereform contributions responded by increasing individual donations at both the intensive and extensive margins. More critically, individual contributions became more valuable after the reform: postban individual contributions to winning candidates increased firms’ valuation substantially, thereby replicating what only corporate donations achieved preban and partially offsetting the reform’s intent. Despite this, the reform reduced total contributions, increased shareholder protection by reducing excessive contributions, and leveled political participation among firms. Moreover, the reform increased market valuations for contributing firms. Overall, incomplete campaign finance reform does deliver notable successes but has critical loopholes.
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Access to the online full text or PDF requires a subscription.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ucp:jlawec:doi:10.1086/718973
Access Statistics for this article
More articles in Journal of Law and Economics from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().