The impact of political majorities on firm value: Do electoral promises or friendship connections matter?

Renaud Coulomb and Marc Sangnier

Journal of Public Economics, 2014, vol. 115, issue C, 158-170

Abstract: This paper simultaneously estimates the impact of political majorities on the values of firms that would benefit from the platforms of the two main candidates at the 2007 French presidential election, Ségolène Royal and Nicolas Sarkozy, and of those that are ruled or owned by Sarkozy's friends. We use prediction-market data to track each candidate's victory probability, and investigate how this relates to firms' abnormal returns. Our estimates suggest that the value of firms that would likely benefit from the platforms of Royal and Sarkozy changed by 1% and 2%, respectively, with the candidates' victory probabilities, and that firms connected to Sarkozy out-performed others by 3% due to his election.

Keywords: Political majority; Prediction markets; Firm value; Abnormal returns; Political connections (search for similar items in EconPapers)
JEL-codes: C58 D72 D84 G14 H50 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (26)

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Related works:
Working Paper: The Impact of Political Majorities on Firm Value: Do Electoral Promises or Friendship Connections Matter? (2014)
Working Paper: The Impact of Political Majorities on Firm Value: Do Electoral Promises or Friendship Connections Matter? (2014)
Working Paper: The Impact of Political Majorities on Firm Value: Do Electoral Promises or Friendship Connections Matter? (2014)
Working Paper: Impacts of Political Majorities on French Firms: Electoral Promises or Friendship Connections? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:115:y:2014:i:c:p:158-170

DOI: 10.1016/j.jpubeco.2014.05.001

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