The Power of the Street: Evidence from Egypt's Arab Spring

79 Pages Posted: 26 Aug 2014 Last revised: 26 Jun 2016

See all articles by Daron Acemoglu

Daron Acemoglu

Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Tarek A. Hassan

Boston University; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Ahmed Tahoun

London Business School

Multiple version iconThere are 3 versions of this paper

Date Written: July 29, 2015

Abstract

During Egypt's Arab Spring, unprecedented popular mobilization and protests brought down Hosni Mubarak's government and ushered in an era of competition between three groups: elites associated with Mubarak's National Democratic Party (NDP), the military, and the Islamist Muslim Brotherhood. Street protests continued to play an important role during this power struggle. We show that these protests are associated with differential stock market returns for firms connected to the three groups. Using daily variation in the number of protesters, we document that more intense protests in Tahrir Square are associated with lower stock market valuations for firms connected to the group currently in power relative to non-connected firms, but have no impact on the relative valuations of firms connected to other powerful groups. We further show that activity on social media may have played an important role in mobilizing protesters, but had no direct effect on relative valuations. According to our preferred interpretation, these events provide evidence that, under weak institutions, popular mobilization and protests have a role in restricting the ability of connected firms to capture excess rents.

Keywords: corruption, de facto political power, institutions, mobilization, protests, rents, value of connections

JEL Classification: E02, G12, G3, O11, O43, O53

Suggested Citation

Acemoglu, Daron and Hassan, Tarek Alexander and Tahoun, Ahmed, The Power of the Street: Evidence from Egypt's Arab Spring (July 29, 2015). Fama-Miller Working Paper, Available at SSRN: https://ssrn.com/abstract=2485984 or http://dx.doi.org/10.2139/ssrn.2485984

Daron Acemoglu

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Tarek Alexander Hassan (Contact Author)

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Ahmed Tahoun

London Business School ( email )

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