The Impact of Political Majorities on Firm Value: Do Electoral Promises or Friendship Connections Matter?

Renaud Coulomb and Marc Sangnier ()
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Renaud Coulomb: PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, Grantham Research Institute on Climate Change and the Environment - LSE - London School of Economics and Political Science, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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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: abnormal returns; prediction markets; political majority; firm value; political connections (search for similar items in EconPapers)
Date: 2014
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00990241
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Published in Journal of Public Economics, Elsevier, 2014, 115 (C), pp.158-170

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Related works:
Journal Article: 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: 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)
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