Competing for Access: Conflicts of Interests within the US Executive Branch

• In Event: Intersections of Power, Politics, and Corporate Strategies

Abstract

Do firms benefit from connections to government officials? Better connected firms are thought to benefit from their connections, as well as receive particularistic government benefits. It is unclear, however, how and which types of government connections — ranging from previous employment relations to government officials owning capital assets — benefit firms. Moreover, who benefits when government officials have connections to multiple firms? On the one hand, firms may have to compete for favors and preferential treatment from connected officials. On the other hand, government officials with more diverse capital assets and previous experience in the private sector may be more responsive to the private sector more generally.

To address these questions, we compile a brand new dataset on the financial disclosures of senior executive branch officials who have worked in federal agencies in the United States government from 2015-2023. The dataset covers all previous employment histories, capital assets, and liabilities reported by government officials when they enter federal agencies and throughout their tenure in office. We merge these financial disclosures data with all data on federal contracting, lobbying, and federal advisory committees to construct the most comprehensive dataset on conflicts of interests and political connections within the US federal government.

We then exploit within-firm variation and the timing of individuals connected with firms entering federal agencies to estimate the effect of firm’s political connections with senior government officials. We examine whether firms receive more government contracts from federal agencies if their previously connected individuals enter the agencies as senior officials and whether specific channels of connections drive the effect. We also examine how firms’ lobbying and participation in agencies’ federal advisory committees change.

Authors

• Florian Hollenbach, Copenhagen Business School

• Kyuwon Lee, University of Southern California

• David Szakonyi, George Washington University