Search by keyword

Research Seminar: Selling Indulgences: The Political Economy of Tariff Exemption Grants

Research Seminar: Selling Indulgences: The Political Economy of Tariff Exemption Grants

Nazarbayev University Graduate School of Business invites you to the Research Seminar titled "The Political Economy of Tariff Exemption Grants" by Dr. Bill Megginson.


We investigate whether firm-level political connections affect the allocation of exemptions from the tariffs imposed on $550 billion of Chinese goods imported to the United States annually in 2018 and 2019. We find that firms reporting higher political lobbying expenditures in the prior years are more likely to receive approval for exemptions. Our evidence points to politicians not only rewarding supporters, but also punishing the opposition: past campaign contributions to the party controlling the executive branch increase the likelihood of approval, while past contributions to the party in opposition increase the chance of rejection. Our results strongly point to quid pro quo arrangements between politicians and firms, trading campaign contributions in exchange for tariff exemptions, as opposed to the “information” channel linking access to politicians to regulatory outcomes. Abnormal returns at the announcement of an application reveal that tariff exemptions are valuable to applicants: the announcement of an approval increases the market capitalization of the applicant firm by approximately $51 million, while rejected applications lead to negative abnormal returns. We further document that markets correctly anticipate the higher likelihood of approval of proposals by firms with beneficial political connections, indicating that this quid pro quo arrangement is transparent to market participants.

Special Time: 8am-9am local time (UTC+6)


Add to your calendar


Tuesday, October 19, 2021






Bill Megginson

Professor and Price Chair in Finance

Bill Megginson is Professor and Price Chair in Finance at the University of Oklahoma’s Michael F. Price College of Business. He is also Visiting Professor at the University of International Business and Economics (Beijing) and Consulting Editor for the Journal of International Business Studies. From 2002 to 2007, he was a voting member of the Italian Ministry of Economics and Finance’s Global Advisory Committee on Privatization. During spring 2008, he was the Fulbright Tocqueville Distinguished Chair in American Studies and Visiting Professor at the Université-Paris Dauphine. He received the University of Oklahoma’s top research prize, a George Lynn Cross Research Professorship, in April 2010. From 2013 to 2019 he was the Saudi Aramco Chair Professor in Finance at King Fahd University of Petroleum and Minerals in Dhahran, Saudi Arabia.

Professor Megginson's research interest has focused in recent years on the privatization of state-owned enterprises, sovereign wealth fund investments, energy finance, and investment banking principles and practices. He has published refereed articles in several top academic journals, including the Journal of Economic Literature, the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies, the Journal of Law and Economics, the Journal of Financial and Quantitative Analysis, and Foreign Policy. His co-authored study documenting significant performance improvements in recently privatized companies received one of two Smith Breeden Distinguished Paper Awards for outstanding research published in the Journal of Finance during 1994. He is author or co-author of nine textbooks.

Professor Megginson’s research has been frequently cited in academic and professional publications. His articles have been downloaded over 66,000 times from the Social Sciences Research Network, and his books and articles have been cited over 23,000 times (according to Google Scholar). His co-authored privatization survey article, published in the Journal of Economic Literature in 2001, is the eighth most widely cited finance article published since 2000, and the most widely cited article published in 2001. He is associate editor for two academic journals, and has served as a privatization consultant for the New York Stock Exchange, the OECD, the IMF, the World Federation of Exchanges, and the World Bank. He has visited 85 countries during his lifetime, and has lived in Spain, Pakistan, France, and Saudi Arabia, in addition to the United States.

Dr. Megginson has a B.S. degree in chemistry from Mississippi College, an MBA from Louisiana State University, and a Ph.D. in finance from Florida State University. Prior to entering academia in 1986, he worked for five years as a petroleum chemist at the world's largest styrene monomer plant and at the largest independent petroleum refinery in the United States. He has been a Visiting Professor at Duke University, Vanderbilt University, the University of Zurich, the University of Amsterdam, Bocconi University, Université-Paris Dauphine.