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On political connectedness and the arrest of Ivan Boesky

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  • Charles Knoeber
  • Mark Walker

Abstract

The bombshell arrest of Ivan Boesky on November 14, 1986 signaled the intention of then-US attorney for the southern district of New York, Rudy Giuliani, to increase enforcement of laws against insider trading. Looking at concurrent stock price changes, we find that New York companies were affected especially. More interestingly, New York firms with active political arms fared better than those without them; and New York firms connected to Mr. Giuliani’s Republican Party fared better still. We find no such effects for non-New York firms. These findings suggest that political connectedness was valuable in the era of more rigorous legal enforcement associated with Mr. Giuliani’s attack on insider trading. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Charles Knoeber & Mark Walker, 2013. "On political connectedness and the arrest of Ivan Boesky," Public Choice, Springer, vol. 157(1), pages 41-50, October.
    • Handle: RePEc:kap:pubcho:v:157:y:2013:i:1:p:41-50
    DOI: 10.1007/s11127-012-9939-7
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    More about this item

    Keywords

    G14; K42; Enforcement of law; Event study;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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