Mara Faccio: 'Politics and Finance: International Evidence'

Mara Faccio, the Tom and Patty Hefner Chair in Finance and professor of management, discussed “Politics and Finance: International Evidence” at the Westwood Lecture Series on March 1, 2023. 

Abstract. Across the globe, governments exert extensive influence over business activities. Some have argued that government influence and intervention may be a way to cure alleged market failures. At the same time, firms attempt to exert influence over the political process by means such as campaign contributions, lobbying, or through the appointment of politicians and government bureaucrats to top corporate positions. Some have expressed the concern that corporate influence over the political process may distort the allocation of public resources.

How commonly do firms establish ties with the political establishment? Do firms benefit from these ties? That is, do corporate political connections add to firm value and, if so, how? Perhaps most importantly, to what extent do corporate political connections give rise to distortions in the allocation of public resources? 

Bio. Faccio’s research interest is in international finance. Her research has appeared in a variety of academic journals including the American Economic Review, the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies, the Journal of Financial and Quantitative Analysis, the Journal of Accounting and Economics, the Journal of Corporate Finance, and Management Science.

Faccio’s article “The ultimate ownership of western European corporations” (with Larry H. P. Lang) received the JFE All Star Paper award (it is the most cited paper in Volume 65 of the Journal of Financial Economics and the 15th most cited JFE paper of all time based on citations per year). Her paper “Political connections and corporate bailouts” (with John J. McConnell and Ronald W. Masulis) was nominated for the Brattle Prize, which is awarded to the best corporate finance paper published in the Journal of Finance. Her paper “Large shareholderdiversification and corporate risk-taking” (with Maria-Teresa Marchica and Roberto Mura) was the Best Paper Runner Up for the BlackRock/Brennan Award (Review of Financial Studies). Her papers “Taxes and capital structure” and ”Taxes, capital structure choices, and equity value” (both with Jin Xu) have both won the Sharpe Award for Best Paper in the Journal of Financial and Quantitative Analysis.

Faccio is a Research Associate of the National Bureau of Economic Research, a Senior Fellow of the Asian Bureau of Finance and Economics Research and a Research Associate of the European Corporate Governance Institute. She is a Managing Editor of the Journal of Financial and Quantitative Analysis. She is the Tom and Patty Hefner Chair in Finance and Professor of Management (Finance) at Purdue University, Daniels School of Business. Prior to joining the Purdue faculty in 2007, Faccio was a faculty member at Vanderbilt University (2003-07), the University of Notre Dame (2001-03) and Università Cattolica, Milan (1999-2001). Faccio earned a PhD in finance from Universita’ Cattolica (Milan), an MPhil from City University Business School (London), and both a master’s degree and a bachelor’s degree from Universita’ di Pavia (Italy). Faccio is an avid golfer and a big fan of the Italian soccer team Juventus.