Date of Award
Master of Science (MS)
Economics and Finance
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.
Bacon, Kennon, "Political Connections and Abnormal Stock Returns: An Analysis of the Trump Nominations" (2020). All Graduate Plan B and other Reports. 1445.
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