Surprise Election for Trump Connections

Posted: 2 Mar 2018 Last revised: 21 Jan 2021

See all articles by Travers Child

Travers Child

China Europe International Business School (CEIBS)

Nadia Massoud

Melbourne Business School, University of Melbourne

Mario Schabus

Michigan State University

Yifan Zhou

University of Melbourne

Date Written: April 24, 2020

Abstract

We exploit Donald Trump’s nonpolitical background and surprise election victory to identify the value of sudden presidential ties among S&P 500 firms. In our setting firms did not choose to become politically connected, so we identify treatment effects comparatively free of selection bias prevalent in this literature. Firms with presidential ties enjoyed greater abnormal returns around the 2016 election. Since Trump’s inauguration, connected firms had better performance; received more government contracts; and were less subject to unfavorable regulatory actions. We rule out a number of confounding factors, including industry designation, sensitivity to Republican platforms, campaign finance, and lobbying expenditures.

Keywords: political connections, event study, firm performance, Donald Trump

JEL Classification: G1, G3, H57, D7, P16

Suggested Citation

Child, Travers and Massoud, Nadia and Schabus, Mario and Zhou, Yifan, Surprise Election for Trump Connections (April 24, 2020). https://www.sciencedirect.com/science/article/pii/S0304405X20303317, Available at SSRN: https://ssrn.com/abstract=3125228 or http://dx.doi.org/10.2139/ssrn.3125228

Travers Child

China Europe International Business School (CEIBS) ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

Nadia Massoud (Contact Author)

Melbourne Business School, University of Melbourne ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia
+61 3 9349 8130 (Phone)
+61 3 9349 8136 (Fax)

HOME PAGE: http://mbs.edu/facultyresearch/facultydirectory/Pages/NadiaMassoud.aspx

Mario Schabus

Michigan State University ( email )

270 North Business Complex
East Lansing, MI 48824-1034
United States

HOME PAGE: http://broad.msu.edu/profile/schabusm/

Yifan Zhou

University of Melbourne ( email )

Department of Finance
Level 12, 198 Berkeley St
Carlton, VIC 3053
Australia

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