Surprise election for Trump connections

Travers Barclay Child, Nadia Massoud, Mario Schabus and Yifan Zhou

Journal of Financial Economics, 2021, vol. 140, issue 2, 676-697

Abstract: We exploit Donald Trump’s nonpolitical background and surprise election victory to identify the value of sudden presidential ties among S&P 500 firms. In our setting firms did not choose to become politically connected, so we identify treatment effects comparatively free of selection bias prevalent in this literature. Firms with presidential ties enjoyed greater abnormal returns around the 2016 election. Since Trump’s inauguration, connected firms had better performance, received more government contracts, and were less subject to unfavorable regulatory actions. We rule out a number of confounding factors, including industry designation, sensitivity to Republican platforms, campaign finance, and lobbying expenditures.

Keywords: Political connections; Event study; Firm performance; Donald Trump (search for similar items in EconPapers)
JEL-codes: D73 G14 G38 H57 P16 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:140:y:2021:i:2:p:676-697

DOI: 10.1016/j.jfineco.2020.12.004

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