Paper #1183

Title:

Betting on Hitler: The value of political connections in Nazi Germany

Authors:

Joachim Voth and Thomas Ferguson

Date:

February 2008

Abstract:

This paper examines the value of connections between German industry and the Nazi movement in early 1933. Drawing on previously unused contemporary sources about management and supervisory board composition and stock returns, we find that one out of seven firms, and a large proportion of the biggest companies, had substantive links with the National Socialist German Workers’ Party. Firms supporting the Nazi movement experienced unusually high returns, outperforming unconnected ones by 5% to 8% between January and March 1933. These results are not driven by sectoral composition and are robust to alternative estimators and definitions of affiliation.

Keywords:

Political Connections, Stock Market, Asset Pricing, Nazi Rise to Power, Interwar Germany

JEL codes:

G12, G13, G15, N24

Area of Research:

Economic and Business History

Published in:

Quarterly Journal of Economics, February 2008, 123 (1), pp. 101-137

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