Campaign Finance Transparency Affects Legislators’ Election Outcomes and Behavior

Abstract

Do audits by executive agencies impact the behavior of those audited? Does revealing negative information about legislators affect electoral results and behavior? Institutions that encourage transparency, such as campaign finance disclosure, influence mass and elite behavior. We theorize that greater transparency provides information to voters during legislative campaigns about the character of candidates, and this information affects voter and legislator behavior. The U.S. Federal Election Commission conducted random audits of 10 percent of U.S. House members in the 1970s. This FEC program is the only randomized experiment a U.S. agency has conducted on federal legislators and their electorates. We find that legislators with audits yielding campaign finance violations did poorly in the subsequent election relative to the control group. Audited nonsouthern legislators had reduced general election margins; and audited southern legislators faced more primary competition. Audited incumbents whose audits revealed violations were more likely to resign.

Voters Use Campaign Finance Transparency and Compliance Information

“…16 Rhodes et al (2019) find that the negative effects of dark money support persist in the general election context, though they are somewhat muted. Wood and Grose (2021) also find that voters punished noncompliance in the general election context in their study of randomized FEC audits following the 1976 election. However, to react to campaign finance information, voters must have it.…”

“…Campaigns can also be legally compliant and have low transparency where the law does Few scholars have analyzed voter preference around candidate legal compliance generally, compliance with campaign transparency rules specifically, or voluntary transparency (over-compliance) of any kind. Wood and Grose (2021) find that incumbents with campaign finance compliance problems revealed through the FEC's random compliance audit program suffered reduced vote share in the subsequent election. Other scholars have written about scandals, which can result when campaign rules are violated, but which also emerge in myriad other ways (Basinger et al, 2014).…”

“…Whether these results would hold in a nonpartisan election is an interesting avenue for future research. Because these findings exist in the partisan primary context, and that compliance effects(Wood & Grose 2021) and dark money effects(Rhodes et al, 2019) are still detectible in the partisan general election context, it's possible that these results would also extend to the context of nonpartisan elections.…”

“…But campaign finance compliance problems are common (Wood & Grose, 2021). Studies of voter reactions to candidate compliance problems are rare in the literature, outside of research on scandal (e.g., Basinger et al, 2014).…”

“…Studies of voter reactions to candidate compliance problems are rare in the literature, outside of research on scandal (e.g., Basinger et al, 2014). Recent work suggests, however, that voters care about campaign finance compliance: when random FEC audits revealed noncompliance with campaign finance laws, incumbents lost support in a subsequent election (Wood & Grose, 2021, see also Gaskins et al, 2019).…”