Date of Award

5-2020

Degree Type

Report

Degree Name

Master of Science (MS)

Department

Economics and Finance

Committee

Paul Fjeldsted

Committee

Ben Blau

Committee

Lucas Rentschler

Abstract

Shortly after winning the 2016 Presidential Election, Donald Trump began announcing his Cabinet nominations. I examine cumulative abnormal returns (CARs) for firms with political connections to Cabinet and some non-Cabinet level appointments. Nominee and stock characteristics are aggregated, and I find positive and significant CARs surrounding the announcement dates. Additionally, the traits of being a Cabinet nominee, being a board member, and having a narrow confirmation margin all significantly explain the CARs for various event windows and subgroups. The annualized CARs around the announcement date for these firms are often greater than 100% in excess of the market, providing strong evidence that political connections are highly sought after and rewarded by the market.

Included in

Finance Commons

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