Paper #1542

Títol:

Political connections and informed trading: Evidence from TARP

Autors:

Ozlem Akin, Nicholas S. Coleman, Christian Fons-Rosen i José-Luis Peydró

Data:

Octubre 2016 (Revisió: Març 2021)

Resum:

We study insider trading behavior surrounding the largest bank bailout in history: TARP. In politically-connected banks, insider buying during the pre-TARP period is associated with increases in abnormal returns around bank-specific TARP announcement; for unconnected banks, trading and returns are uncorrelated. Results hold across insiders within the same bank and are stronger for finance-related government connections. Through a FOIA request we obtained the previously undisclosed TARP funds requested; the ratio of received to requested funds correlates both with abnormal returns and insider buying behavior in connected banks.

Paraules clau:

Political connections, Political economy in banking, Insider trading, TARP, bank bailouts

Codis JEL:

D72, G01, G21, G28

Àrea de Recerca:

Economia de l'Empresa i Organització Industrial / Finances i Comptabilitat / Economia Laboral, Pública, de Desenvolupament i de la Salut

Publicat a:

Financial Management, 50(3), 2021, pp. 619-644

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