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Corporate Capture of Congress in Carbon Politics: Evidence from Roll Call Votes

Finance & Accounting

Speaker:Professor Jiekun Huang, Gies College of Business, Illinois
Date: Thursday 1 June 2023
Time: 13:45
Location: Constantine

Further details

How special interests shape legislative decisions is a fundamental question in political economy. In this paper, we examine the influence of carbon-intensive corporations on legislative voting behavior on climate bills and the impact of the votes on firm value. Using a comprehensive sample of votes on contested climate bills in the US House of Representatives and Senate, we find that politicians with high carbon dependency, i.e., those whose campaigns received more contributions from carbon intensive firms, are more likely to cast anti-climate votes. This relation is stronger when politicians face greater electoral pressure. Using the narrow defeat of incumbent politicians to generate plausibly exogenous shocks to their elected peers' carbon dependency, we find that the relation is likely causal. We further find evidence that carbon intensive firms benefit from their connected politicians casting anti-climate votes.