The value of international political connections: evidence from Trump's 2016 surprise election

Alexander Fink; Jörg R. Stahl

doi:10.1016/j.jebo.2020.03.034

The value of international political connections: evidence from Trump's 2016 surprise election

Alexander Fink^*, Jörg R. Stahl^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

5 Citations (Scopus)

Abstract

We investigate the value of international political connections by exploiting the 2016 surprise election of Donald Trump as U.S. president. To identify political connections, we compile a dataset of campaign contributions of U.S. subsidiaries of multinational companies headquartered outside of the U.S. We match these firms with comparable foreign firms that did not make any U.S. campaign contributions. We find that following the 2016 elections the abnormal equity returns for foreign firms that contributed considerably more to Republicans than to Democrats were about 2 percentage points higher than for their non-contributing peers. The results suggest that cross-border political connections can be valuable firm assets.

Original language	English
Pages (from-to)	691-700
Number of pages	10
Journal	Journal of Economic Behavior and Organization
Volume	176
DOIs	https://doi.org/10.1016/j.jebo.2020.03.034
Publication status	Published - Aug 2020

Keywords

Campaign contributions
Event study
International political connections
U.S. presidential elections 2016

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10.1016/j.jebo.2020.03.034

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title = "The value of international political connections: evidence from Trump's 2016 surprise election",

abstract = "We investigate the value of international political connections by exploiting the 2016 surprise election of Donald Trump as U.S. president. To identify political connections, we compile a dataset of campaign contributions of U.S. subsidiaries of multinational companies headquartered outside of the U.S. We match these firms with comparable foreign firms that did not make any U.S. campaign contributions. We find that following the 2016 elections the abnormal equity returns for foreign firms that contributed considerably more to Republicans than to Democrats were about 2 percentage points higher than for their non-contributing peers. The results suggest that cross-border political connections can be valuable firm assets.",

keywords = "Campaign contributions, Event study, International political connections, U.S. presidential elections 2016",

author = "Alexander Fink and Stahl, {J{\"o}rg R.}",

note = "Publisher Copyright: {\textcopyright} 2020 Elsevier B.V.",

year = "2020",

month = aug,

doi = "10.1016/j.jebo.2020.03.034",

language = "English",

volume = "176",

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journal = "Journal of Economic Behavior and Organization",

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T1 - The value of international political connections

T2 - evidence from Trump's 2016 surprise election

AU - Fink, Alexander

AU - Stahl, Jörg R.

PY - 2020/8

Y1 - 2020/8

N2 - We investigate the value of international political connections by exploiting the 2016 surprise election of Donald Trump as U.S. president. To identify political connections, we compile a dataset of campaign contributions of U.S. subsidiaries of multinational companies headquartered outside of the U.S. We match these firms with comparable foreign firms that did not make any U.S. campaign contributions. We find that following the 2016 elections the abnormal equity returns for foreign firms that contributed considerably more to Republicans than to Democrats were about 2 percentage points higher than for their non-contributing peers. The results suggest that cross-border political connections can be valuable firm assets.

AB - We investigate the value of international political connections by exploiting the 2016 surprise election of Donald Trump as U.S. president. To identify political connections, we compile a dataset of campaign contributions of U.S. subsidiaries of multinational companies headquartered outside of the U.S. We match these firms with comparable foreign firms that did not make any U.S. campaign contributions. We find that following the 2016 elections the abnormal equity returns for foreign firms that contributed considerably more to Republicans than to Democrats were about 2 percentage points higher than for their non-contributing peers. The results suggest that cross-border political connections can be valuable firm assets.

KW - Campaign contributions

KW - Event study

KW - International political connections

KW - U.S. presidential elections 2016

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M3 - Article

AN - SCOPUS:85087218173

SN - 0167-2681

VL - 176

SP - 691

EP - 700

JO - Journal of Economic Behavior and Organization

JF - Journal of Economic Behavior and Organization

ER -

The value of international political connections: evidence from Trump's 2016 surprise election

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CUBE: Católica Lisbon Research Unit in Business and Economics

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The value of international political connections: evidence from Trump's 2016 surprise election

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Keywords

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CUBE: Católica Lisbon Research Unit in Business and Economics

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