Working Paper: NBER ID: w16952
Authors: Arindrajit Dube; Ethan Kaplan; Suresh Naidu
Abstract: We estimate the impact of coups and top-secret coup authorizations on asset prices of partially nationalized multinational companies that stood to benefit from US-backed coups. Stock returns of highly exposed firms reacted to coup authorizations classified as top-secret. The average cumulative abnormal return to a coup authorization was 9% over 4 days for a fully nationalized company, rising to more than 13% over sixteen days. Pre-coup authorizations accounted for a larger share of stock price increases than the actual coup events themselves.There is no effect in the case of the widely publicized, poorly executed Cuban operations, consistent with abnormal returns to coup authorizations reflecting credible private information. We also introduce two new intuitive and easy to implement nonparametric tests that do not rely on asymptotic justifications.
Keywords: coups; event studies; political economy
JEL Codes: F50; G14; N10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Coup authorizations (D70) | Stock prices (G19) |
| Precoup authorizations (G52) | Stock prices (G19) |
| Coup events (D74) | Stock prices (G19) |
| Poorly executed Cuban operations (Y50) | Stock prices (G19) |
| Regime changes (P39) | Economic gains for corporations (G38) |