Working Paper: NBER ID: w23356
Authors: Jeffrey R. Brown; Jiekun Huang
Abstract: Using novel data on White House visitors from 2009 through 2015, we find that corporate executives’ meetings with key policymakers are associated with positive abnormal stock returns. We also find evidence suggesting that following meetings with federal government officials, firms receive more government contracts and are more likely to receive regulatory relief (as measured by the tone of regulatory news). The investment of these firms also becomes less affected by political uncertainty after the meetings. Using the 2016 presidential election as a shock to political access, we find that firms with access to the Obama administration experience significantly lower stock returns following the release of the election result than otherwise similar firms. Overall, our results provide evidence suggesting that political access is of significant value to corporations.
Keywords: political access; firm value; government contracts; regulatory relief; cumulative abnormal returns
JEL Codes: G28; G3; H32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Corporate executives' meetings with key policymakers (G38) | Positive cumulative abnormal returns (CARs) for firms (G14) |
| Political access (D72) | Significant increase in government contracts and regulatory relief (K23) |
| Political access (D72) | Enhanced firm value (G32) |
| 2016 presidential election (K16) | Underperformance of firms with ties to the Obama administration (L25) |
| Political access (D72) | Reduced negative impact of political uncertainty on capital investment (G31) |