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Coups, Corporations, and Classified Information

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  • Arindrajit Dube
  • Ethan Kaplan
  • Suresh Naidu

Abstract

We estimate the impact of coups and top-secret coup authorizations on asset prices of partially nationalized multinational companies that stood to benefit from US-backed coups. Stock returns of highly exposed firms reacted to coup authorizations classified as top-secret. The average cumulative abnormal return to a coup authorization was 9% over 4 days for a fully nationalized company, rising to more than 13% over sixteen days. Pre-coup authorizations accounted for a larger share of stock price increases than the actual coup events themselves.There is no effect in the case of the widely publicized, poorly executed Cuban operations, consistent with abnormal returns to coup authorizations reflecting credible private information. We also introduce two new intuitive and easy to implement nonparametric tests that do not rely on asymptotic justifications.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16952.

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Date of creation: Apr 2011
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Handle: RePEc:nbr:nberwo:16952

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  1. Snowberg, Erik & Wolfers, Justin & Zitzewitz, Eric, 2006. "Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections," IZA Discussion Papers 1996, Institute for the Study of Labor (IZA).
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Cited by:
  1. Christoph Moser & Simon Luechinger, 2012. "The Value of the Revolving Door: Political Appointees and the Stock Market," KOF Working papers 12-310, KOF Swiss Economic Institute, ETH Zurich.
  2. Roberto Bonfatti, 2011. "An Economic Theory of Foreign Interventions and Regime Change," CESifo Working Paper Series 3475, CESifo Group Munich.
  3. Daron Acemoglu & Simon Johnson & Amir Kermani & James Kwak & Todd Mitton, 2013. "The Value of Connections in Turbulent Times: Evidence from the United States," NBER Working Papers 19701, National Bureau of Economic Research, Inc.
  4. Byung-Yeon Kim & Gerard Roland, 2011. "Are the Markets Afraid of Kim Jong-Il?," KIER Working Papers 789, Kyoto University, Institute of Economic Research.
  5. Facundo Albornoz & Esther Hauk, 2010. "Civil War and Foreign Influence," UFAE and IAE Working Papers 836.10, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC), revised 19 Dec 2010.

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