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Interest group activity and long-run stock market performance

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  • Dennis Coates

    ()

  • Bonnie Wilson

    ()

Abstract

This paper provides evidence that interest group activity is negatively related to aggregate stock market performance. In particular, the ¯ndings imply that a one percent increase in the number of interest groups in a country is associated with a reduction in average annual stock market returns of roughly 2-5%, and a reduction in the volatility of annual stock returns of roughly 6-14%. In addition, the ¯ndings indicate that many of the same fundamentals that drive economic growth also explain stock market performance.

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File URL: http://hdl.handle.net/10.1007/s11127-007-9191-8
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Bibliographic Info

Article provided by Springer in its journal Public Choice.

Volume (Year): 133 (2007)
Issue (Month): 3 (December)
Pages: 343-358

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Handle: RePEc:kap:pubcho:v:133:y:2007:i:3:p:343-358

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Web page: http://www.springerlink.com/link.asp?id=100332

Related research

Keywords: Special interest groups; Institutional sclerosis; Stock returns; Volatility; D7; G1; G3; L5; O16;

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References

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  1. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, 06.
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  5. Heston, Steven L. & Rouwenhorst, K. Geert, 1994. "Does industrial structure explain the benefits of international diversification?," Journal of Financial Economics, Elsevier, vol. 36(1), pages 3-27, August.
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  7. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 83-116, February.
  8. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  9. Daron Acemoglu & Simon Johnson & James A. Robinson, 2000. "The Colonial Origins of Comparative Development: An Empirical Investigation," NBER Working Papers 7771, National Bureau of Economic Research, Inc.
  10. Chappell, Henry W, Jr, 1982. "Campaign Contributions and Congressional Voting: A Simultaneous Probit-Tobit Model," The Review of Economics and Statistics, MIT Press, vol. 64(1), pages 77-83, February.
  11. Beck, Thorsten & Levine, Ross & Loayza, Norman, 1999. "Finance and the sources of growth," Policy Research Working Paper Series 2057, The World Bank.
  12. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
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Cited by:
  1. Dennis Coates & Jac Heckelman & Bonnie Wilson, 2011. "Special-interest groups and growth," Public Choice, Springer, vol. 147(3), pages 439-457, June.

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