Searching for Contributions by Moonlight: Politically Connected Firms in Japan

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Why do politicians serve on the boards of private firms, and why do firms bring politicians onto their boards? We examine this question of "politically connected firms" by drawing on a new dataset of "moonlighting" activities by Japanese politicians. Specifically, we focus on incumbents who were serving on boards of corporations just before Japan's House of Representatives elections in 2009, 2012 and 2014 and show that winners of an election are more likely than losers to resign from their posts after the election but are typically reinstated when the next election is approaching. The results of analysis with various outcome variables and some additional evidence suggest the possibility that Japanese politicians leave corporate boards when they become nervous of becoming suspected of corruption but cannot resist the lure of corporate cash as the next election approaches.

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