Do Stock Returns Vary With Campaign Contributions? Bush vs. Gore: The Florida Recount

Abstract

I examine the relation between campaign contributions and stock returns during the Florida recount period of the 2000 presidential elections. Using the full population of publicly traded firms, I find an economically significant positive (negative) relation between pre-election campaign contributions to Bush (Gore) and stock returns during the 37-day election recount period. This relation exists for both the level and partisanship of contributions, and exists incrementally at both the firm and industry levels. These relations are robust to several different specifications, including alternative event windows that exclude the potentially confounding House/Senate races. The firm-level analysis is consistent with contributions being influence-motivated. Copyright 2009 Blackwell Publishing Ltd.

Implications of Political Patronage and Political Costs for Corporate Disclosure

“…20. Our findings are consistent with those of Shon (2010) and Fisman (2001). Shon examines the relationship between campaign contributions and stock returns during the Florida recount period of the American presidential elections in 2000.…”

Political geography and stock returns: The value and risk implications of proximity to political power

“…8 Even though the majority of studies find that political connections are beneficial for firms, some studies show that corporate political connections are costly due to rent-seeking by politicians (see Morck, Stangeland, and Yeung, 2000;Thesmar, 2006a, 2006b;Fisman, Fisman, Galef, and Khuranna, 2006;Fan, Wong, and Zhang, 2007). 9 See also Knight (2006), Shon (2006), and Jayachandran (2006) for evidence that firms benefit from political contributions. On the other hand, Ansolabehere, de Figueiredo, and Snyder (2003), Ansolabehere, Snyder, and Ueda (2004), and Hersch, Netter, and Pope (2008) show that political contributions have no significant impact on legislator voting behavior and on firm valuation.…”

The effect of presidential election in the USA on stock return flow – a study of a political event

“…There are similar papers whose goal was to measure the effect of election results on the stock market - Vuchelen (2003) analysed a Belgium example of the effect of a coalition government on the stock market, whereby he concluded that the market reaction would depend on the political affiliation of the parties (left-wing, right-wing, or centre) that constitute the government. Shon (2010) analysed the impact of the American presidential system during the recounting of presidential ballots in Florida in 2000, which determined the outcome of the election. During this period, Shon noticed a positive abnormal return with companies that funded Bush`s campaign and a negative one with those funding Al Gore`s campaign.…”