The value of international political connections: Evidence from Trump's 2016 surprise election

Alexander Fink and Jörg R. Stahl

Journal of Economic Behavior & Organization, 2020, vol. 176, issue C, 691-700

Abstract: We investigate the value of international political connections by exploiting the 2016 surprise election of Donald Trump as U.S. president. To identify political connections, we compile a dataset of campaign contributions of U.S. subsidiaries of multinational companies headquartered outside of the U.S. We match these firms with comparable foreign firms that did not make any U.S. campaign contributions. We find that following the 2016 elections the abnormal equity returns for foreign firms that contributed considerably more to Republicans than to Democrats were about 2 percentage points higher than for their non-contributing peers. The results suggest that cross-border political connections can be valuable firm assets.

Keywords: International political connections; Campaign contributions; Event study; U.S. presidential elections 2016 (search for similar items in EconPapers)
JEL-codes: D72 G14 G15 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:176:y:2020:i:c:p:691-700

DOI: 10.1016/j.jebo.2020.03.034

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