The Value of Connections in Turbulent Times: Evidence from the United States
The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small network of financial sector executives during a time of acute crisis and heightened policy discretion.
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Copy CitationDaron Acemoglu, Simon Johnson, Amir Kermani, James Kwak, and Todd Mitton, "The Value of Connections in Turbulent Times: Evidence from the United States," NBER Working Paper 19701 (2013), https://doi.org/10.3386/w19701.Download Citation
Published Versions
Acemoglu, Daron & Johnson, Simon & Kermani, Amir & Kwak, James & Mitton, Todd, 2016. "The value of connections in turbulent times: Evidence from the United States," Journal of Financial Economics, Elsevier, vol. 121(2), pages 368-391. citation courtesy of 
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