Politics and finance: a study on the impact of campaign donations on Brazilian firms

  • Mariana G. DaviEmail author
  • Marcelo S. Portugal


This paper aims to identify potential benefits obtained by companies for their contributions to political campaigns. We used an extensive database with information on donations to House, Senate, and Presidency candidates in the 2006 and 2010 elections. The variables of interest analyzed were the cumulative abnormal return by the time the results of each election became known and the return on equity in the year following the elections. Panel regressions were estimated as ordinary least squares, and fixed effects of year and industry were included. The results indicate that not only does the market anticipate future benefits for companies that contributed to campaigns—which is reflected in positive cumulative abnormal returns at the announcement of the election results—but these companies also have higher returns on equity than those that were not involved in the political process. In addition, donations to winning candidates generate higher returns than donations to losing candidates, which supports the return of favors hypothesis. Similarly, contributions to candidates affiliated with the president’s coalitions also had a higher impact when compared to donations to political opponents, as did donations to left-wing parties.


Campaign contributions Fixed effects Cumulative abnormal return Return on equity 

JEL Classification

D7 G1 G3 


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Economic AnalysisBanco Cooperativo SicrediPorto AlegreBrazil
  2. 2.Graduate Program in Economics and Business AdministrationFederal University of Rio Grande do Sul (UFRGS)Porto AlegreBrazil

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