Political Connections and White-collar Crime: Evidence from Insider Trading in France

Thomas Bourveau, Renaud Coulomb and Marc Sangnier

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates whether political connections affect individuals' propensity to engage in white-collar crime. We identify connections by campaign donations or direct friendships and use the 2007 French Presidential election as a marker of change in the value of political connections to the winning candidate. We compare the behavior of Directors of publicly listed companies who were connected to the future President to the behavior of other non-connected Directors, before and after the election. Consistent with the belief that connections to a powerful politician can protect someone from prosecution or punishment, we uncover indirect evidence that connected Directors are more likely to engage in suspicious insider trading after the election: Purchases by connected Directors trigger larger abnormal returns, connected Directors are less likely to comply with trading disclosure requirements in a timely fashion, and connected Directors trade closer in time to their firms' announcements of results.

Keywords: Political Connections; White-Collar Crime; Insider Trading (search for similar items in EconPapers)
JEL-codes: D72 G14 G18 G38 K22 K42 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-law, nep-pol and nep-soc
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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https://mpra.ub.uni-muenchen.de/104236/1/MPRA_paper_104236.pdf original version (application/pdf)

Related works:
Working Paper: Political Connections and White-Collar Crime: Evidence from Insider Trading in France (2023)
Journal Article: Political Connections and White-Collar Crime: Evidence from Insider Trading in France (2021)
Working Paper: Political Connections and Insider Trading (2016)
Working Paper: Political Connections and Insider Trading (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:104236

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