This paper investigates whether corporate political influence affects government investment decisions. We study the efficacy of the various forms of political influence, ranging from the relatively passive connections between firms and politicians, such as those based on politicians’ voting...

Using novel data on bank applications to the Troubled Asset Relief Program (TARP), we study the effect of government assistance on bank risk taking. Bailed-out banks initiate riskier loans and shift assets toward riskier securities after receiving government support. However, this shift in risk...