All the President’s Friends: Political Access and Firm Value
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.
We are grateful for helpful comments from Heitor Almeida, James Brown, Mara Faccio, Ioannis Floros, Itay Goldstein, Austan Goolsbee, Huseyin Gulen, Tim Johnson, Josh Pollet, Scott Weisbenner, and seminar participants at University of Illinois at Urbana-Champaign and Iowa State University. We thank Kun Chen, Zhongnan Xiang, and Yinchao Zhu for research assistance. We are solely responsible for any remaining errors. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Jeffrey R. Brown & Jiekun Huang, 2020. "All the President's Friends: Political Access and Firm Value," Journal of Financial Economics, .