The Value of the Revolving Door: Political Appointees and the Stock Market

37 Pages Posted: 10 Sep 2012

See all articles by Simon Luechinger

Simon Luechinger

University of Lucerne

Christoph Moser

ETH Zürich - KOF Swiss Economic Institute

Multiple version iconThere are 2 versions of this paper

Date Written: August 31, 2012

Abstract

We analyze stock market reactions to announcements of political appointments from the private sector and corporate appointments of former government officials. Using unique data on corporate affiliations and announcements of all Senate-confirmed U.S. Defense Department appointees of six administrations, we find positive abnormal returns for political appointments. These estimates are not driven by important observations, volatile stocks or industry-wide developments. Placebo events yield no effects. Effects are larger for top government positions and less anticipated announcements. We also find positive abnormal returns for corporate appointments. Our results suggest that conflicts of interest matter also in a country with strong institutions.

Keywords: political appointees, revolving door, conflict of interest, event study, stock market

JEL Classification: G140, D730, G300, H570

Suggested Citation

Luechinger, Simon and Moser, Christoph, The Value of the Revolving Door: Political Appointees and the Stock Market (August 31, 2012). CESifo Working Paper Series No. 3921, Available at SSRN: https://ssrn.com/abstract=2144153 or http://dx.doi.org/10.2139/ssrn.2144153

Simon Luechinger

University of Lucerne ( email )

Frohburgstrasse 3
P.O. Box 4466
Lucerne, 6002
Switzerland

Christoph Moser (Contact Author)

ETH Zürich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

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