Corporate Campaign Contributions as a Predictor for Abnormal Stock Returns After Presidential Elections

Abstract:     
In the U.S. campaign contributions by companies play a major role in financing election campaigns. We analyze contributions by companies before an election and stock market performance after the election for the presidential elections from 1992 until 2004. We find that (i) the percentage of contributions given to the winner in a presidential election and (ii) the total contribution (divided by market capitalization) have a significant positive impact on a company's stock market performance after an election. While under Clinton both factors were equally important, during the Bush-presidency the total contribution had comparatively more impact.

Number of Pages in PDF File: 25

Keywords: Presidential Election, Corporate Campaign Contribution, Abnormal Returns

JEL Classification: D72, G10, P16

working papers series