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  5. Firm Donations and Political Rhetoric: Evidence from a National Ban

Firm Donations and Political Rhetoric: Evidence from a National Ban

  • Julia Cagé
  • Caroline Le Pennec
  • Elisa Mougin
American Economic Journal: Economic Policy (Forthcoming)

Abstract

Do campaign finance regulations influence politicians? We study the effects of a French ban on political donations from firms passed in 1995. We use a difference-in-differences approach and a novel dataset combining the campaign manifestos issued by every candidate running for a seat in the French parliament with detailed data on their campaign contributions. The ban on firm donations could affect political rhetoric, either through a resource effect or through a change in the pool of potential donors. We show that banning firm donations discourages candidates from advertising their local presence, as well as eco-nomic issues, during the campaign. The ban also leads candidates from non-mainstream parties to use more polarized language. These findings suggest that politicians strategi-cally adjust their campaign communication to secure contributions from specific sources, and that campaign finance reforms may affect the information made available to voters through their impact on candidates’ rhetoric.

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