Do Powerful Politicians Cause Corporate Downsizing?
"Recent research at Harvard Business School began with the premise that as a state's congressional delegation grew in stature and power in Washington, D.C., local businesses would benefit from the increased federal spending sure to come their way.
It turned out quite the opposite. In fact, professors Lauren Cohen, Joshua Coval, and Christopher Malloy discovered to their surprise that companies experienced lower sales and retrenched by cutting payroll, R&D, and other expenses. Indeed, in the years that followed a congressman's ascendancy to the chairmanship of a powerful committee, the average firm in his state cut back capital expenditures by roughly 15 percent, according to their working paper, 'Do Powerful Politicians Cause Corporate Downsizing?' " HBS Working Knowledge; May 24, 2010
Join us as the panel discusses their new approach for identifying the impact of government spending on the private sector.