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

KOF Working Papers No. 310

38 Pages Posted: 18 Sep 2012

See all articles by Simon Luechinger

Simon Luechinger

University of Lucerne

Christoph Moser

KOF Swiss Economic Institute

Multiple version iconThere are 2 versions of this paper

Date Written: September 17, 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: G14, D73, G30, H57

Suggested Citation

Luechinger, Simon and Moser, Christoph, The Value of the Revolving Door: Political Appointees and the Stock Market (September 17, 2012). KOF Working Papers No. 310. Available at SSRN: https://ssrn.com/abstract=2147674 or http://dx.doi.org/10.2139/ssrn.2147674

Simon Luechinger

University of Lucerne ( email )

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

Christoph Moser (Contact Author)

KOF Swiss Economic Institute ( email )

Zurich
Switzerland

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