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Firm Donations and Political Rhetoric: Evidence from a National Ban

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  • Julia Cagé
  • Caroline Le Pennec
  • Elisa Mougin

Abstract

We study France's 1995 ban on firm donations to politicians. We use a difference-in-differences approach and a novel dataset combining the campaign manifestos issued by candidates running in French parliamentary elections with data on their campaign contributions. We show that banning firm donations discourages candidates from advertising their local presence during the campaign, as well as economic issues. The ban also leads candidates from nonmainstream parties to use more extreme language. This suggests that private donors shape politicians' topics of interest, and that campaign finance reforms may affect the information made available to voters through their impact on candidates' rhetoric.

Suggested Citation

  • Julia Cagé & Caroline Le Pennec & Elisa Mougin, 2024. "Firm Donations and Political Rhetoric: Evidence from a National Ban," American Economic Journal: Economic Policy, American Economic Association, vol. 16(3), pages 217-256, August.
    • Handle: RePEc:aea:aejpol:v:16:y:2024:i:3:p:217-56
    DOI: 10.1257/pol.20220218
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    References listed on IDEAS

    as
    1. Caroline Le Pennec, 2024. "Strategic Campaign Communication: Evidence from 30,000 Candidate Manifestos," The Economic Journal, Royal Economic Society, vol. 134(658), pages 785-810.
    2. Matt Taddy, 2013. "Multinomial Inverse Regression for Text Analysis," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 108(503), pages 755-770, September.
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • K16 - Law and Economics - - Basic Areas of Law - - - Election Law

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