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Bridge over ocean
8 October 2018 Financial Analysts Journal Volume 74, Issue 4

Corporate Political Strategies and Return Predictability

  1. Chansog (Francis) Kim
  2. Incheol Kim
  3. Christos Pantzalis
  4. Jung Chul Park

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.

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