Betting on the Wrong Horse: Lobbying on TPP and the 2016 U.S. Presidential Election

Moritz Hennicke and Michael Blanga-Gubbay

No zcwsn, OSF Preprints from Center for Open Science

Abstract: We provide systematic evidence that lobbying by firms on trade agreements matters for their stock prices. We leverage a unique shock to U.S. trade policy -- the unexpected victory of Donald Trump in the 2016 U.S. presidential election, and the de-facto U.S. withdrawal from the Trans-Pacific Partnership (TPP) -- creating exogenous variation in investors' expectations of potential gains from lobbying. We find that share prices of companies that lobbied in favor of TPP underperformed by 0.41pp lower returns over the course of 10 days following the election. We construct an additional measure of lobbying on the agreement from online news articles, that strengthens our assumption that market participants are informed and build expectations over potential gains from TPP. By comparing the original TPP agreement with its newer version (CPTPP) without U.S. participation, we provide suggestive evidence that lobbying on specific provisions of high importance to the U.S. led to lower returns.

Date: 2023-10-13
New Economics Papers: this item is included in nep-int and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:osf:osfxxx:zcwsn

DOI: 10.31219/osf.io/zcwsn

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