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The Private Interests of Public Officials: Financial Regulation in the US Congress
Author(s) -
Carr Peterson Jordan,
Grose Christian R.
Publication year - 2021
Publication title -
legislative studies quarterly
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.728
H-Index - 54
eISSN - 1939-9162
pISSN - 0362-9805
DOI - 10.1111/lsq.12294
Subject(s) - deregulation , legislation , private investment in public equity , finance , business , financial market , equity (law) , financial regulation , financial system , financial services , financial market participants , economics , private equity fund , private equity , indirect finance , market economy , law , political science
Legislators' private financial holdings affect policy decisions. Due to financial self‐interest, we theorize that legislators whose personal investment portfolios include equities from firms affected by proposed policies vote for legislation that benefits those firms. We also theorize that legislators with greater personal exposure to equity investments support policies that benefit equities markets generally. We create a novel data set of legislators' personal stock investments and examine major congressional actions since the 1990s on financial deregulation and market intervention. US House members who own stocks in firms who benefit from financial deregulation vote for deregulation. House members with greater exposure to financial and automotive stocks support the financial and auto bailouts, respectively. General exposure to equities markets is also associated with support for key legislation boosting markets. The normative implications are significant, as legislators' private interests influence decisions in the public sphere.