Local soldier fatalities and war profiteers: New tests of the political cost hypothesis

Matthew Boland, David Godsell

Research output: Contribution to journalArticlepeer-review

Abstract

We test the political cost hypothesis using local soldier fatalities as a source of as-if-random variation in the threat of political costs for local defense firms. Soldier fatalities vary the threat of political costs for defense firms because the U.S. tradition of shared sacrifice during war vulgarizes war profits amid dead soldiers. Local defense firms record more income-decreasing accruals, equal to 1.17 percent of total assets, in response to a one standard deviation increase in local soldier fatalities (an additional 29 soldier fatalities in the average state-year). A wide variety of robustness tests corroborate our inferences.

Original languageEnglish (US)
Article number101316
JournalJournal of Accounting and Economics
Volume70
Issue number1
DOIs
StatePublished - Aug 2020

Keywords

  • Earnings management
  • Political cost hypothesis
  • Proximate casualties hypothesis
  • War profiteers

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Fingerprint

Dive into the research topics of 'Local soldier fatalities and war profiteers: New tests of the political cost hypothesis'. Together they form a unique fingerprint.

Cite this