Surprise Political Disclosures and Firm Investment

Rahul Chauhan, Finance PhD Student

In March 2024, the Supreme Court of India mandated the disclosure of all political donations via "electoral bonds" to parties from April 2019 to January 2024, finding the bonds unconstitutional.  This decision unveiled detailed donation data from corporations and individuals, providing a rare chance to examine the influence of political ties on Indian firms' financial behavior and outcomes. The study aims to combine this donation information with corporate data from the Centre for Monitoring the Indian Economy (CMIE), loan details from the Ministry of Corporate Affairs, and CMIE's Capex Dx database. The research focuses on assessing the effect of political connections on firms' access to credit, particularly from state-owned banks, and their project announcements and financing, exploring how these connections potentially lead to resource misallocation and affect overall productivity growth.