The Private Interests of Public Officials: Financial Regulation in the US Congress. Issue 1 (17th August 2020)

• Record Type: Journal Article
• Authors: Carr Peterson, Jordan; Grose, Christian R.
• Is Part Of: Legislative studies quarterly. Volume 46:Issue 1(2021)
• Page Start: 49
• Page End: 84
• Publication Date: 2020-08-17
• Subjects: economics -- deregulation -- legislatures -- political economy -- political science -- public finance -- representation -- roll‐call voting -- stock market -- US Congress; Legislative bodies -- Periodicals; Parlement; Procédure législative; Système parlementaire; Étude comparée (Descripteur de forme); Périodique électronique (Descripteur de forme); Ressource Internet (Descripteur de forme); 328
• DOI: 10.1111/lsq.12294
• Languages: English
• ISSNs: 0362-9805

Abstract

Abstract : 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.