We assess whether observable corporate political strategies can serve as channels of value relevant political information flow into stock prices and form the basis for profitable return predictability strategies. We document that returns of politically connected firms’ stocks lead those of their non-connected peers, suggesting that information shocks associated with new policies and other political developments become evident first in the stock prices of firms that pursue political strategies and then, with delay, in those of similar non-connected firms.
Kim, Chansog (Francis), Incheol Kim, Christos Pantzalis, and Jung Chul Park. “Corporate Political Strategies and Return Predictability.” Financial Analysts Journal 74, no. 4 (December 12, 2018): 87–101. https://doi.org/10.2469/faj.v74.n4.5.
Financial Analysts Journal