Abstract

https://ssrn.com/abstract=1707181
 
 

References (79)



 
 

Citations (6)



 


 



Capitalizing on Capitol Hill: Informed Trading by Hedge Fund Managers


Meng Gao


University of Illinois at Urbana-Champaign - Department of Finance

Jiekun Huang


University of Illinois at Urbana-Champaign - Department of Finance

November 10, 2015

Journal of Financial Economics (2016) 121, 521-545.
AFA 2012 Chicago Meetings Paper
Fifth Singapore International Conference on Finance 2011

Abstract:     
This paper examines the hypothesis that hedge fund managers gain an informational advantage in securities trading through their connections with lobbyists. Using datasets on the long-equity holdings and lobbyist connections of hedge funds from 1999 through 2012, we show that hedge funds outperform passive benchmarks by 56 to 93 basis points per month on their political holdings when they are connected to lobbyists. Furthermore, the political outperformance of connected funds decreased significantly after the STOCK Act became effective. Our study provides evidence on the transmission of private political information in financial markets and on the value of such information to financial market participants.

Number of Pages in PDF File: 55

Keywords: Hedge funds, lobbyists, informed trading, performance, information transfer

JEL Classification: G11, G23, G14


Open PDF in Browser Download This Paper

Date posted: November 13, 2010 ; Last revised: February 24, 2017

Suggested Citation

Gao, Meng and Huang, Jiekun, Capitalizing on Capitol Hill: Informed Trading by Hedge Fund Managers (November 10, 2015). Journal of Financial Economics (2016) 121, 521-545.; AFA 2012 Chicago Meetings Paper; Fifth Singapore International Conference on Finance 2011 . Available at SSRN: https://ssrn.com/abstract=1707181 or http://dx.doi.org/10.2139/ssrn.1707181

Contact Information

Meng Gao
University of Illinois at Urbana-Champaign - Department of Finance ( email )
1206 South Sixth Street
Champaign, IL 61820
United States
Jiekun Huang (Contact Author)
University of Illinois at Urbana-Champaign - Department of Finance ( email )
1206 South Sixth Street
Champaign, IL 61820
United States
HOME PAGE: http://www.huangjk.info
Feedback to SSRN


Paper statistics
Abstract Views: 15,487
Downloads: 1,283
Download Rank: 11,039
References:  79
Citations:  6