Paper #1542

Título:

Political connections and informed trading: Evidence from TARP

Autores:

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

Fecha:

Octubre 2016 (Revisado: Marzo 2021)

Resumen:

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.

Palabras clave:

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

Códigos JEL:

D72, G01, G21, G28

Área de investigación:

Economía de la Empresa y Organización Industrial / Finanzas y Contabilidad / Economía Laboral, Pública, de Desarrollo y de la Salud

Publicado en:

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

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