Andrew Koch, PhD, University of Pittsburgh

Crony Capitalism and Firm Value (co-authored with Alan Crane) We examine the relation between the intensity of regulatory restrictions and the values of publicly traded firms affected by those restrictions. We find that the effects of regulation on value are conditional on firms’ political connections. Regulation increases the values of firms exposed to regulating agencies with large fractions of ``revolving door’’ employees, and firms headquartered in states with Senators that sit on committees associated with the relevant regulatory agencies. The gains from regulation are at the expense of small, private, and politically unconnected firms. Our results support a regulatory capture view of federal regulation in the U.S.

Read more about Koch.