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Do Politically Connected Boards Affect Firm Value?Eitan GoldmanIndiana University Bloomington - Department of Finance Jörg RochollESMT European School of Management and Technology Jongil Soaffiliation not provided to SSRN June 2009 The Review of Financial Studies, Vol. 22, Issue 6, pp. 2331-2360, 2009 Abstract: This article explores whether political connections are important in the United States. The article uses an original hand-collected data set on the political connections of board members of S&P 500 companies to sort companies into those connected to the Republican Party and those connected to the Democratic Party. The analysis shows a positive abnormal stock return following the announcement of the nomination of a politically connected individual to the board. This article also analyzes the stock-price response to the Republican win of the 2000 presidential election and finds that companies connected to the Republican Party increase in value, and companies connected to the Democratic Party decrease in value.
Keywords: G30, G34, G38 Accepted Paper SeriesDate posted: June 1, 2009Suggested CitationContact Information
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