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"Captain Gains" on Capitol Hill

Author

Listed:
  • Shang-Jin Wei
  • Yifan Zhou

Abstract

Using transaction-level data on US congressional stock trades, we find that lawmakers who later ascend to leadership positions perform similarly to matched peers beforehand but outperform them by 47 percentage points annually after ascension. Leaders’ superior performance arises through two mechanisms. The political influence channel is reflected in higher returns when their party controls the chamber, sales of stocks preceding regulatory actions, and purchase of stocks whose firms receiving more government contracts and favorable party support on bills. The corporate access channel is reflected in stock trades that predict subsequent corporate news and greater returns on donor-owned or home-state firms.

Suggested Citation

  • Shang-Jin Wei & Yifan Zhou, 2025. ""Captain Gains" on Capitol Hill," NBER Working Papers 34524, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34524
    Note: CF POL
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    More about this item

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • P1 - Political Economy and Comparative Economic Systems - - Capitalist Economies

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