Investing in Influence: Investors, Portfolio Firms, and Political Giving

This paper investigates whether institutional investors influence the political activities of their portfolio firms, using political action committee (PAC) giving as a window into the broader question of whether institutional investors can leverage their concentrated ownership to extract benefits from portfolio firms for their own interests rather than those of their clients.

The sample covers 574 institutional investors (those with at least $100 million in assets under management, i.e., 13-F filers) matched to 2,456 portfolio firms that had PACs, over the period 1980–2018. The primary source of variation is the first acquisition by an institutional investor of at least one percent of a portfolio firm’s outstanding shares, yielding 68,387 large acquisition events. PAC giving data come from FEC records matched by name to investor and firm entities. The main regression specification examines how the relationship between investor and firm PAC contributions to the same congressional district changes after such an acquisition, using a saturated set of fixed effects including firm × investor, firm × congressional district, firm × election cycle, investor × congressional district, investor × election cycle, and district × election cycle.

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Investing in Influence: Investors, Portfolio Firms, and Political Giving