When Do Firms Deliver on the Jobs They Promise in Return for State Aid?

Dong, Qingkai; Raghunandan, Aneesh; Rajgopal, Shivaram

doi:10.2139/ssrn.4255259

Cited by 1 publication

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“…The paper's main hypothesis is motivated by recent work examining how subsidies relate to other types of firms' political connections. Aobdia, Koester, and Petacchi [2021] show that firms that spend more on state‐level political campaign contributions obtain more frequent state‐level subsidies although Dong, Raghunandan, and Rajgopal [2023] highlight that politically motivated subsidies may be less effective. At a federal level, Cohen, Coval, and Malloy [2011] show that federal legislators with more Congressional power funnel more federal funds (“pork barrel” spending) to firms in their home districts.…”

Section: Background and Related Literaturementioning

confidence: 99%

Government Subsidies and Corporate Misconduct

RAGHUNANDAN

2024

J of Accounting Research

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I study whether firms that receive targeted U.S. state‐level subsidies are more likely to subsequently engage in corporate misconduct. I find that firms are more likely to engage in misconduct in subsidizing states, but not in other states that they operate in, after receiving state subsidies. Using data on both federal and state enforcement actions, and exploiting the legal principle of dual sovereignty for identification, I show that this finding reflects an increase in the underlying rate of misconduct and that this increase is attributable to lenient state‐level misconduct enforcement. Collectively, my findings present evidence of an important consequence of targeted firm‐specific subsidies: nonfinancial misconduct that potentially could impact the very stakeholders subsidies are ostensibly intended to benefit.

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Section: Background and Related Literaturementioning

confidence: 99%

Government Subsidies and Corporate Misconduct

RAGHUNANDAN

2024

J of Accounting Research

View full text Add to dashboard Cite

show abstract

When Do Firms Deliver on the Jobs They Promise in Return for State Aid?

Cited by 1 publication

References 21 publications

Government Subsidies and Corporate Misconduct

Government Subsidies and Corporate Misconduct

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