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Washington Policy Analysts and the Propagation of Political Information

Author

Listed:
  • Daniel Bradley

    (Department of Finance, University of South Florida, Tampa, Florida 33620)

  • Sinan Gokkaya

    (Department of Finance, Ohio University, Athens, Ohio 45701)

  • Xi Liu

    (Department of Finance, Miami University, Oxford, Ohio 45056)

  • Roni Michaely

    (Department of Finance, University of Hong Kong, Pok Fu Lam, Hong Kong; European Corporate Governance Institute, 1000 Brussels, Belgium)

Abstract

Washington policy research analysts (WAs) monitor political developments and produce research to interpret the impact of these events. We find institutional clients channel more commissions to brokerages providing policy research and commission-allocating institutional clients generate superior returns on their politically sensitive trades. We find that WA policy research reports are associated with significant price and volume reactions. Finally, we find sell-side analysts with access to WA issue superior stock recommendations on politically sensitive stocks. These effects are particularly acute during periods of high political uncertainty. Overall, we uncover a unique and an important conduit through which political information filters into asset prices.

Suggested Citation

  • Daniel Bradley & Sinan Gokkaya & Xi Liu & Roni Michaely, 2024. "Washington Policy Analysts and the Propagation of Political Information," Management Science, INFORMS, vol. 70(8), pages 5246-5269, August.
    • Handle: RePEc:inm:ormnsc:v:70:y:2024:i:8:p:5246-5269
    DOI: 10.1287/mnsc.2023.4919
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