The Effect of Political Donation on Election Outcomes: Evidence from Taiwan Legislative Elections

Abstract

While past studies have attempted to understand the factors influencing the donation amount received by candidates, little scholarly attention has been paid to the consequences of political donation. Using the candidate-level data from three legislative elections in Taiwan from 2008 to 2016, this study examines the relationship between political donation and candidates’ election outcomes. The empirical findings demonstrate that political donation exerts a significant positive effect on candidates’ election outcomes. Specifically, candidates who receive more campaign contributions are more likely to get a high vote share and elected. However, different sources of political donations have different effects on election outcomes and donation from individuals plays a more important role among four sources of political donations. Furthermore, this study also finds that political donation has a larger impact on non-incumbent candidates’ election outcomes than that of incumbent candidates. Overall, the findings suggest that money matters for candidates’ electoral fate, especially for challengers. Given the importance of political donation in election outcomes, the government should enhance transparency of campaign contributions to ensure fair electoral competition.