Access to Obama White House Brought Companies Better Stock Performance, Study Shows

Reason reports:

Companies whose executives visited the White House during the Obama administration had their stock prices rise more than normal after the meetings, but underperformed after Donald Trump won the election, a new paper by researchers at the University of Illinois finds.


The finance professors, Jeffrey Brown and Jiekun Huang, published their findings in a working paper issued by the National Bureau of Economic Research and titled "All the President's Friends: Political Access and Firm Value."

"Following meetings with federal government officials, firms receive more government contracts and are more likely to receive regulatory relief," the professors write. "Firms with access to the Obama administration experience significantly lower stock returns following the release of the [2016] election results than otherwise similar firms. Overall, our results provide evidence suggesting that political access is of significant value to corporations."

The professors outlined three ways that government meetings may be valuable to companies. "Government officials may influence the allocation of lucrative government contracts towards firms whose executives have interacted with them," Brown and Huang write. Officials or politicians may also "provide more regulatory relief to companies that have access to the politicians." Finally, "access to politicians may enable companies to gain an informational advantage about government policies and actions and help resolve political uncertainty."

The scholars used White House visitor logs to identify 2,286 meetings between White House officials and corporate executives between January 2009 and December 2015.

The rent-seeking society in action.