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All the President’s Friends: Political Access and Firm Value

Author

Listed:
  • Jeffrey R. Brown
  • Jiekun Huang

Abstract

Using novel data on White House visitors from 2009 through 2015, we find that corporate executives’ meetings with key policymakers are associated with positive abnormal stock returns. We also find evidence suggesting that following meetings with federal government officials, firms receive more government contracts and are more likely to receive regulatory relief (as measured by the tone of regulatory news). The investment of these firms also becomes less affected by political uncertainty after the meetings. Using the 2016 presidential election as a shock to political access, we find that firms with access to the Obama administration experience significantly lower stock returns following the release of the election result than otherwise similar firms. Overall, our results provide evidence suggesting that political access is of significant value to corporations.

Suggested Citation

  • Jeffrey R. Brown & Jiekun Huang, 2017. "All the President’s Friends: Political Access and Firm Value," NBER Working Papers 23356, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23356 Note: CF PE POL
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    References listed on IDEAS

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    Cited by:

    1. Luigi Zingales, 2017. "Towards a Political Theory of the Firm," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 113-130, Summer.

    More about this item

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G3 - Financial Economics - - Corporate Finance and Governance
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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