Keywords
political connections, economic crises, institutions
Abstract
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 prior 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. Personal connections to top executive branch officials can matter greatly even in a country with strong overall institutions, at least during a time of acute financial crisis and heightened policy discretion.
Original Publication Citation
The value of connections in turbulent times: Evidence from the United States (with D. Acemoglu, S. Johnson, A. Kermani, and J. Kwak), 2016, Journal of Financial Economics 121, 368–391.
BYU ScholarsArchive Citation
Acemoglu, Daron; Johnson, Simon; Kermani, Amir; Kwak, James; and Mitton, Todd, "The Value of Connections in Turbulent Times: Evidence from the United States" (2016). Faculty Publications. 9263.
https://scholarsarchive.byu.edu/facpub/9263
Document Type
Peer-Reviewed Article
Publication Date
2016
Publisher
Journal of Financial Economics
Language
English
College
Marriott School of Business
Department
Finance
Copyright Status
© 2016 Elsevier B.V. All rights reserved.
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