"Captain Gains" on Capitol Hill

Shang-Jin Wei and Yifan Zhou

No 34524, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: G10 P1 (search for similar items in EconPapers)
Date: 2025-11
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