Washington Policy Analysts and the Propagation of Political Information

Daniel Bradley (), Sinan Gokkaya (), Xi Liu () and Roni Michaely ()
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Daniel Bradley: Department of Finance, University of South Florida, Tampa, Florida 33620
Sinan Gokkaya: Department of Finance, Ohio University, Athens, Ohio 45701
Xi Liu: Department of Finance, Miami University, Oxford, Ohio 45056
Roni Michaely: Department of Finance, University of Hong Kong, Pok Fu Lam, Hong Kong; European Corporate Governance Institute, 1000 Brussels, Belgium

Management Science, 2024, vol. 70, issue 8, 5246-5269

Abstract: Washington policy research analysts (WAs) monitor political developments and produce research to interpret the impact of these events. We find institutional clients channel more commissions to brokerages providing policy research and commission-allocating institutional clients generate superior returns on their politically sensitive trades. We find that WA policy research reports are associated with significant price and volume reactions. Finally, we find sell-side analysts with access to WA issue superior stock recommendations on politically sensitive stocks. These effects are particularly acute during periods of high political uncertainty. Overall, we uncover a unique and an important conduit through which political information filters into asset prices.

Keywords: policy analysts; policy research; political uncertainty; trading commissions; institutional trading; sell-side analysts (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:70:y:2024:i:8:p:5246-5269

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