Do Politically Connected Boards Affect Firm Value?

Posted: 1 Jun 2009

See all articles by Eitan Goldman

Eitan Goldman

Indiana University - Kelley School of Business - Department of Finance

Jörg Rocholl

ESMT European School of Management and Technology

Jongil So

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: June 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

Suggested Citation

Goldman, Eitan and Rocholl, Joerg and So, Jongil, Do Politically Connected Boards Affect Firm Value? (June 2009). The Review of Financial Studies, Vol. 22, Issue 6, pp. 2331-2360, 2009. Available at SSRN: https://ssrn.com/abstract=1408431 or http://dx.doi.org/hhn088

Eitan Goldman (Contact Author)

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States
812-856-0749 (Phone)

Joerg Rocholl

ESMT European School of Management and Technology ( email )

Schlossplatz 1
Berlin
Germany

HOME PAGE: http://www.esmt.org/en/159244

Jongil So

affiliation not provided to SSRN

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