Coups, Corporations, and Classified Information

43 Pages Posted: 18 Apr 2011

See all articles by Arindrajit Dube

Arindrajit Dube

University of California, Berkeley - Institute for Research on Labor and Employment

Ethan Kaplan

Stockholm University - Institute for International Economic Studies (IIES)

Suresh Naidu

Columbia University

Date Written: April 2011

Abstract

We estimate the impact of coups and top-secret coup authorizations on asset prices of partially nationalized multinational companies that stood to benefit from US-backed coups. Stock returns of highly exposed firms reacted to coup authorizations classified as top-secret. The average cumulative abnormal return to a coup authorization was 9% over 4 days for a fully nationalized company, rising to more than 13% over sixteen days. Pre-coup authorizations accounted for a larger share of stock price increases than the actual coup events themselves.There is no effect in the case of the widely publicized, poorly executed Cuban operations, consistent with abnormal returns to coup authorizations reflecting credible private information. We also introduce two new intuitive and easy to implement nonparametric tests that do not rely on asymptotic justifications.

Suggested Citation

Dube, Arindrajit and Kaplan, Ethan Daniel and Naidu, Suresh, Coups, Corporations, and Classified Information (April 2011). NBER Working Paper No. w16952. Available at SSRN: https://ssrn.com/abstract=1810306

Arindrajit Dube (Contact Author)

University of California, Berkeley - Institute for Research on Labor and Employment ( email )

2521 Channing Way #5555
Berkeley, CA 94720
United States
510-642-9951 (Phone)

HOME PAGE: http://www.irle.berkeley.edu/cwed/dube.html

Ethan Daniel Kaplan

Stockholm University - Institute for International Economic Studies (IIES) ( email )

Stockholm, SE-10691
Sweden

Suresh Naidu

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

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