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    Political Influence and Merger Antitrust Reviews
    04 Jun 2019Working Paper Summaries

    Political Influence and Merger Antitrust Reviews

    by Mihir N. Mehta, Suraj Srinivasan, and Wanli Zhao
    This paper uses a large sample of United States mergers between 1998 and 2010 to study how political connections help firms obtain favorable antitrust regulatory outcomes for mergers. Given that antitrust regulators are subject to congressional oversight, the authors predict and find evidence that outcomes systematically favor firms that are constituents of politicians serving on judiciary committees.
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    Author Abstract

    Antitrust regulators play a critical role in protecting market competition. We examine whether firms can use the political process to opportunistically influence antitrust reviews of corporate merger transactions. We exploit the fact that in some mergers, acquirers and/or targets are connected to powerful U.S. politicians that serve on the two congressional committees with antitrust regulator oversight. We find that merger parties with these connections receive relatively favorable antitrust review outcomes. To establish a causal link, we use plausibly exogenous shocks to firm-politician links and a falsification test. Politician incentives to influence merger antitrust review outcomes appear to be driven by lobbying, contributions, and prior business connections. In sum, our findings suggest that political interference affects the ability of antitrust regulators to provide independent recommendations about the anti-competitive effects of mergers.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: May 2019
    • HBS Working Paper Number: HBS Working Paper #19-114
    • Faculty Unit(s): Accounting and Management
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    Suraj Srinivasan
    Suraj Srinivasan
    Philip J. Stomberg Professor of Business Administration
    Unit Head, Accounting and Management
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