How Did the Ban on Corporate Campaign Financing Affect Different Types of Candidacies? Evidence From Adi 4650 in Brazilian Elections

This paper estimates the causal effect of the prohibition of corporate campaign donations in Brazil—resulting from the Brazilian Supreme Court’s ruling in ADI 4650 (2015)—on campaign fundraising. The analysis uses microdata from the Brazilian Electoral Court (TSE) campaign finance records covering municipal and general elections from 2006 to 2022. The main estimates focus on the first election following the institutional shock (2016 for municipal offices, 2018 for state and federal offices), while extended periods are used in the event-study analysis. Identification relies on a Difference-in-Differences design with continuous treatment, in which the intensity of the shock varies according to each office’s historical dependence on corporate donations, measured by the average share of corporate contributions in total campaign revenues prior to 2015. We estimate a log-linear model of campaign revenue aggregated by office, state, and election year, including office, state, and year fixed effects, with standard errors clustered at the state level. The analysis focuses on the first election following the institutional shock (2016/2018) in order to minimize contamination from subsequent institutional adjustments. The results show a negative and statistically significant coefficient for this interaction term, consistent with proportionally larger declines in fundraising among offices that had historically relied most heavily on corporate donations. An event-study analysis with continuous treatment corroborates these findings, revealing no evidence of differential pre-trends prior to the reform and documenting a sharp and persistent decline in fundraising among the most exposed offices beginning in the first election after the ban. The findings provide causal evidence that reforms to campaign finance rules generate heterogeneous effects across political offices, asymmetrically reshaping the distribution of financial resources available for electoral competition. JEL Codes: D72; K16; C21