Date of Award

5-2018

Degree Type

Report

Degree Name

Master of Science (MS)

Department

Economics and Finance

First Advisor

Ben Blau

Second Advisor

Tyler Brough

Abstract

On April 2, 2012, Congress passed the Stop Trading on Congressional Knowledge (STOCK) Act. The purpose of this legislation was to enhance transparency among the financial investments of Congress members, congressional staffers, and other government employees. One year later, an amendment was passed which no longer required staffers or government employees to publish their holdings online citing “national security”. Treating this event as a natural experiment, I examine whether insider trading occurred in the days leading up to and through the signing of the law by President Obama. In general, I find that portfolios of the 50 most commonly held stocks by Congress significantly outperformed the market in the days leading up to the amendment. Additionally, I find that political affiliation and the number/amount of congressional holdings provided no meaningful impact on these returns.

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