Washington Policy Analysts and the Propagation of Political Information
48 Pages Posted: 10 Aug 2017 Last revised: 29 Jun 2021
Date Written: June 02, 2021
Washington policy-research analysts (WAs) monitor political developments and produce research to interpret the impact of these events. We find institutional clients generate superior returns on their politically sensitive trades and channel more commissions to brokerages providing policy research. Further, WA policy-research reports are associated with significant market reactions. Finally, sell-side analysts with access to WA issue superior stock recommendations. These effects are particularly acute during periods of high political uncertainty. Overall, we uncover a new conduit through which political information filters into asset prices.
Keywords: Policy analysts; policy research; political uncertainty; trading commissions; institutional trading; sell-side analysts
JEL Classification: L50, G10, G18, G20, G23
Suggested Citation: Suggested Citation