Corporate Political Contributions and Stock Returns

47 Pages Posted: 28 Oct 2006 Last revised: 14 Mar 2013

Michael J. Cooper

University of Utah - David Eccles School of Business

Huseyin Gulen

Purdue University - Krannert School of Management

Alexei V. Ovtchinnikov

HEC Paris - Finance Department

Date Written: September 26, 2008

Abstract

We develop a new and comprehensive database of firm-level contributions to U.S. political campaigns from 1979 to 2004. We construct variables that measure the extent of firm support for candidates. We find that these measures are positively and significantly correlated with the cross-section of future returns. The effect is strongest for firms that support a greater number of candidates which hold office in the same state that the firm is based. In addition, there are stronger effects for firms whose contributions are slanted toward House candidates and Democrats.

Keywords: political connections, stock returns

JEL Classification: G3, G28

Suggested Citation

Cooper, Michael J. and Gulen, Huseyin and Ovtchinnikov, Alexei V., Corporate Political Contributions and Stock Returns (September 26, 2008). Available at SSRN: https://ssrn.com/abstract=940790 or http://dx.doi.org/10.2139/ssrn.940790

Michael J. Cooper

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

Huseyin Gulen

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Alexei V. Ovtchinnikov (Contact Author)

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

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