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.
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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
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