Payoffs for political donations

Companies that make political donations are more likely to be awarded government contracts with terms containing “sweetheart deals” for the firms, according to a study by researchers at Florida Atlantic University, Ball State University and the University of Colorado-Colorado Springs. The researchers looked at the effect of political connections on a firm’s federal contracting activity and found that connected firms are more likely to be awarded a government contract, and their contracts are larger in size and represent a higher portion of their total sales. The study, to be published in the journal Financial Review, focused on four “sweetheart” terms, including no-bid contracts, that are clearly beneficial to a firm but not obviously advantageous to the government.

Andrea Richard
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