The Value of the Revolving Door: Political Appointees and the Stock Market

Christoph Moser () and Simon Lüchinger
Authors registered in the RePEc Author Service: Simon Luechinger

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: We analyze stock market reactions to announcements of political appointments from the private sector and corporate appointments of former government officials. Using unique data on corporate affiliations and announcements of all Senate-confirmed U.S. Defense Department appointees of six administrations, we find positive abnormal returns for political appointments. These estimates are not driven by important observations, volatile stocks, industry-wide developments or the omission of further commonly used return predictors. Placebo events for close competitors and alternative dates yield no effects. Effects are larger for top government positions and less anticipated announcements. We also find positive abnormal returns for corporate appointments and positive effects of political connections on procurement volume. Our results suggest that concerns over conflicts of interest created by the revolving door are not unfounded, even in a country with strong institutions.

JEL-codes: D73 G14 G30 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (46)

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Related works:
Journal Article: The value of the revolving door: Political appointees and the stock market (2014)
Working Paper: The Value of the Revolving Door: Political Appointees and the Stock Market (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100594

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