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The Impact of Regulation on Firm Value: Evidence from Political Connections

Alan D. Crane & Andrew Koch

Review of Corporate Finance Studies2025https://doi.org/10.1093/rcfs/cfaf014article
AJG 3ABDC A*
Weight
0.37

Abstract

We examine the relationship between regulatory intensity and firm value. We find that firms facing high regulatory intensity exhibit lower valuations. However, it is the reverse for politically connected firms. Firms with political ties and high regulatory exposure have higher valuation ratios, and their market values increase following new regulations. Additionally, these firms have higher markups and face lower entrance rates by new establishments, consistent with weakened competition. Nonetheless, not all results are robust to the choice of specification. Overall, our findings provide some support for a regulatory capture perspective, suggesting that regulation may enhance value for politically connected firms.

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https://doi.org/https://doi.org/10.1093/rcfs/cfaf014

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@article{alan2025,
  title        = {{The Impact of Regulation on Firm Value: Evidence from Political Connections}},
  author       = {Alan D. Crane & Andrew Koch},
  journal      = {Review of Corporate Finance Studies},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1093/rcfs/cfaf014},
}

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The Impact of Regulation on Firm Value: Evidence from Political Connections

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.