In 2002, an amendment to UK parliamentary regulations removed
restrictions on the participation of members of parliament (MPs) in
parliamentary proceedings related to their corporate interests. Using
this amendment as a quasi-natural experiment, we demonstrate higher
equity returns for FTSE 350 firms connected to an MP due to the increase
in the value of political access, net of the expertise of the
politician. Post-amendment, MPs with corporate connections are more
likely to be members of parliamentary select and joint committees and
attend more committee meetings. Firms are more likely to appoint MPs and
reduce political donations. The benefits of higher political access are
greater for firms with family ownership and lower accounting transparency.
