The Value of the Revolving Door: Political Appointees and the Stock Market

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 11.09.2012, 12:15 - 13:30


Presentation by 

Simon Luechinger (University of Lucerne)


We analyze stock market reactions to announcements of political appointments from the private sector and corporate appointments of former government officials. Using unique data on corporate affiliations and announcements of all Senate confirmed U.S. Defense Department appointees of six administrations, we find robust positive abnormal returns for announcements of political appointments, which are larger for (former) board members, top government pay-grades, Democrats, and for at least partly unanticipated announcements. We also find positive - yet less robust - abnormal returns for corporate appointments. Our results are consistent with the view that conflicts of interest matter also in a country with strong institutions.

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