The Value of the Revolving Door: Political Appointees and the Stock Market
AbstractWe analyze stock market reactions to announcements of political appointments from the private sector and corporate appointments of former government officials. Using unique data on corporate affiliations and announcements of all Senate-confirmed U.S. Defense Department appointees of six administrations, we find positive abnormal returns for political appointments. These estimates are not driven by important observations, volatile stocks or industry-wide developments. Placebo events yield no effects. Effects are larger for top government positions and less anticipated announcements. We also find positive abnormal returns for corporate appointments. Our results suggest that conflicts of interest matter also in a country with strong institutions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by KOF Swiss Economic Institute, ETH Zurich in its series KOF Working papers with number 12-310.
Length: 36 pages
Date of creation: Aug 2012
Date of revision:
Political appointees; revolving door; conflict of interest; event study; stock market;
Other versions of this item:
- Simon Luechinger & Christoph Moser, 2012. "The Value of the Revolving Door: Political Appointees and the Stock Market," CESifo Working Paper Series 3921, CESifo Group Munich.
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- MARA FACCIO & RONALD W. MASULIS & JOHN J. McCONNELL, 2006. "Political Connections and Corporate Bailouts," Journal of Finance, American Finance Association, vol. 61(6), pages 2597-2635, December.
- Jayachandran, Seema, 2006.
"The Jeffords Effect,"
Journal of Law and Economics,
University of Chicago Press, vol. 49(2), pages 397-425, October.
- Arindrajit Dube & Ethan Kaplan & Suresh Naidu, 2011.
"Coups, Corporations, and Classified Information,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 126(3), pages 1375-1409.
- Marianne Bertrand & Matilde Bombardini & Francesco Trebbi, 2011. "Is It Whom You Know or What You Know? An Empirical Assessment of the Lobbying Process," NBER Working Papers 16765, National Bureau of Economic Research, Inc.
- Jordi Blanes i Vidal & Mirko Draca & Christian Fons-Rosen, 2010. "Revolving Door Lobbyists," CEP Discussion Papers dp0993, Centre for Economic Performance, LSE.
- Bechtel, Michael M. & Schneider, Gerald, 2010. "Eliciting Substance from ‘Hot Air’: Financial Market Responses to EU Summit Decisions on European Defense," International Organization, Cambridge University Press, vol. 64(02), pages 199-223, April.
- Bunkanwanicha, Pramuan & Wiwattanakantang, Yupana, 2008.
"Big Business Owners in Politics,"
CEI Working Paper Series
2008-17, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
- Michael J. Cooper & Huseyin Gulen & Alexei V. Ovtchinnikov, 2010. "Corporate Political Contributions and Stock Returns," Journal of Finance, American Finance Association, vol. 65(2), pages 687-724, 04.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.