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The impact of political majorities on firm value: do electoral promises or friendship connections matter?

Coulomb, Renaud and Sangnier, Marc (2014) The impact of political majorities on firm value: do electoral promises or friendship connections matter? Journal of Public Economics, 115. pp. 158-170. ISSN 0047-2727

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Identification Number: 10.1016/j.jpubeco.2014.05.001

Abstract

This paper simultaneously estimates the impact of political majorities on the values of firms that would benefit from the platforms of the two main candidates at the 2007 French presidential election, Ségolène Royal and Nicolas Sarkozy, and of those that are ruled or owned by Sarkozy's friends. We use prediction-market data to track each candidate's victory probability, and investigate how this relates to firms' abnormal returns. Our estimates suggest that the value of firms that would likely benefit from the platforms of Royal and Sarkozy changed by 1% and 2%, respectively, with the candidates' victory probabilities, and that firms connected to Sarkozy out-performed others by 3% due to his election.

Item Type: Article
Official URL: http://www.journals.elsevier.com/journal-of-public...
Additional Information: © 2014 Elsevier B.V. All rights reserved.
Divisions: LSE
Subjects: J Political Science > JA Political science (General)
JEL classification: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies
F - International Economics > F5 - International Relations and International Political Economy
F - International Economics > F5 - International Relations and International Political Economy > F59 - International Relations and International Political Economy: Other
H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government
Date Deposited: 12 Jun 2014 16:20
Last Modified: 20 Feb 2019 10:54
URI: http://eprints.lse.ac.uk/id/eprint/57038

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