I investigate the role of moral hazard from government intervention on the risk-taking behavior of U.S. financial institutions prior to the 2008 financial crisis. I use cross-sectional variation in political connections to measure the effect of moral hazard. The central finding is a higher...

Abstract: Do political values influence investing? We answer this question using data on the political contributions and stock holdings of US investment magers. We find that mutual fund managers who make campaign donations to Democrats hold less of their portfolios (relative to non-donors or...