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Interest Group Activity and Long-Run Stock Market Performance

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Author Info
Bonnie Wilson () (Department of Economics, Saint Louis University)
Dennis Coates () (Department of Economics, University of Maryland Baltimore County)

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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://jcsb.slu.edu/repec/slu/wilsonbe0702.pdf
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File Function: First version, April 2007.
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Publisher Info
Paper provided by Department of Economics, John Cook School of Business, Saint Louis University in its series Working Papers with number 2007-02.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 34 pages
Date of creation: Apr 2007
Date of revision:
Publication status: Forthcoming in Public Choice.
Handle: RePEc:slu:wpaper:2007-02

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Postal: Cook Hall / Davis-Shaughnessy Hall, 3674 Lindell Avenue, St. Louis, MO 63108
Phone: 314 977-3848
Fax: 314 977-1478
Web page: http://business.slu.edu/depts/Economics/index.html
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Related research
Keywords: special interest groups; institutional sclerosis; stock returns; volatility;

Other versions of this item:

Find related papers by JEL classification:
D7 - Microeconomics - - Analysis of Collective Decision-Making
G1 - Financial Economics - - General Financial Markets
G2 - Financial Economics - - Financial Institutions and Services
L5 - Industrial Organization - - Regulation and Industrial Policy
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment

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References listed on IDEAS
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  5. Sara Fisher Ellison & Catherine Wolfram, 2001. "Pharmaceutical Prices and Political Activity," NBER Working Papers 8482, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December. [Downloadable!] (restricted)
    Other versions:
  7. 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.
  8. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. 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. [Downloadable!] (restricted)
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    Other versions:
  12. Stratmann, Thomas, 2002. "Can Special Interests Buy Congressional Votes? Evidence from Financial Services Legislation," Journal of Law & Economics, University of Chicago Press, vol. 45(2), pages 345-73, October.
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