Dr. Jay Wang will be presenting:
"Strategic Political Contributions under the Pay-to-Play Restrictions: Evidence from the Municipal Underwriting Market"
Co-Author: Steve Liu
Abstract: This paper investigates political contribution strategies by municipal underwriters under the federal "pay-to-play" Rule G-37. We show that underwriters can circumvent the regulation by bundling multiple smaller donations, which is effective in securing more underwriting business. Large donations exceeding the regulatory limit also lead to higher future market shares, following the two-year business restriction period. Underwriters making large donations primarily aim to capture new business opportunities in states with booming underwriting markets. We also find that donations to political parties are likely used to maintain long-term relationships with issuer officials.
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