Journal of Financial Economics 138 (2020) 415–431

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Journal of Financial Economics

journal homepage: www.elsevier.com/locate/jfec

All the president’s friends: Political access and firm value ✩

Jeffrey R. Brown a,b, Jiekun Huang a,∗
a
Gies College of Business, University of Illinois at Urbana-Champaign, 1206 South 6th St, Champaign, IL 61820, United States
b
National Bureau of Economic Research, United States

a r t i c l e i n f o a b s t r a c t

Article history: Using data on White House visitors from 2009 through 2015, we find that corporate execu-
Received 30 April 2019 tives’ meetings with key policymakers are associated with positive abnormal stock returns.
Revised 11 October 2019
We also find evidence suggesting that firms receive more government contracts and are
Accepted 7 November 2019
more likely to receive regulatory relief (as measured by the tone of regulatory news) fol-
Available online 19 May 2020
lowing meetings with federal government officials. Using the 2016 presidential election as
JEL classification: a shock to political access, we find that firms with access to the Obama administration ex-
G32 perience significantly lower stock returns following the release of the election result than
G38 otherwise similar firms. Overall, our results provide evidence suggesting that political ac-
P16 cess is of significant value to corporations.

Keywords: © 2020 Elsevier B.V. All rights reserved.

Political access
Firm value
Government contracts
Regulatory relief

1. Introduction also by playing the role of customers, financiers, and part-

Access to political decision-makers is a scarce resource
because politicians and their aides have limited time and
can only interact with a limited set of people. Gaining
political access can be of significant value for corpora-
tions, particularly because governments play an increas-
ingly prominent role in influencing firms. Governments af-
fect economic activities not only through regulations but
✩
We are grateful for helpful comments from two anonymous refer-
ees, Heitor Almeida, James Brown, Mara Faccio, Ioannis Floros, Itay Gold-
stein, Austan Goolsbee, Vidhan Goyal, Huseyin Gulen, Joel Houston, Tim
Johnson, Todd Mitton, Randall Morck, Josh Pollet, Scott Weisbenner, Luigi
Zingales, and seminar participants at the 2018 Western Finance Associa-
tion meetings, the 2017 Political Economy of Finance conference at Stigler
Center, University of Illinois at Urbana-Champaign, and Iowa State Uni-
versity. We thank Scott Althaus and Joseph Bajjalieh at the Cline Center
for Advanced Social Research for providing the news data and Kun Chen,
Zhongnan Xiang, and Yinchao Zhu for research assistance. We are solely
responsible for any remaining errors.
∗
Corresponding author.
E-mail address: huangjk@illinois.edu (J. Huang).
ners of firms in the private sector. There is ample anecdotal
evidence suggesting that firms benefit from gaining access
to powerful politicians.1 Gaining and maintaining access
to influential policymakers can be an important source of
competitive advantage for companies. Yet despite the im-
portance of political access for firms, the allocation of po-
litical access across firms and its effects on firm value re-
mains underexplored.
In this paper, we investigate the characteristics of firms
with political access as well as the valuation effects of po-
litical access for corporations. Using a data set of White
1
For example, a Wall Street Journal (2015) article claims that Google
executives’ frequent visits to the White House were instrumental in the
Federal Trade Commission’s decision to drop its antitrust investigation
of the company. As another example, commenting on the close ties be-
tween General Electric and the federal government, a Washington Exam-
iner (2010) article notes that “Obama wants cap-and-trade, GE wants cap-
and-trade. Obama subsidizes embryonic stem-cell research, GE launches
an embryonic stem-cell business. Obama calls for rail subsidies, GE hires
Linda Daschle as a rail lobbyist.”

https://doi.org/10.1016/j.jfineco.2020.05.004
0304-405X/© 2020 Elsevier B.V. All rights reserved.
416 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431
House visitor logs, we identify top corporate executives of
S&P 1500 firms that have face-to-face meetings with high-
level federal government officials. We examine two fun-
damental questions associated with political access. First,
how prevalent is political access—in the literal form of
meetings with influential policymakers—and what are the
characteristics of firms with access to politicians? Second,
does political access increase firm value, and if so, through
what channels?
Given the influences of governments on firms and the
scarce nature of political access, understanding the alloca-
tion of political access across firms is an important ques-
tion. To make a case to a policymaker, one needs to secure
the politician’s attention and convey the messages through
direct or indirect communication (Hall and Wayman, 1990;
Hasen, 2012; Lewis, 1998; Wright, 1990). The existing po-
litical economy literature contends that politicians grant
more access to interest groups that made more contribu-
tions to the officials’ election campaigns (e.g., Herndon,
1982; Gopoian, 1984; Kalla and Broockman, 2016). From a
demand perspective, firms with more exposure to govern-
ment policies should be more likely to seek political ac-
cess. Yet, due to a lack of data on firms’ access to politi-
cians, it remains unclear how political access is allocated
across firms.
Corporations can benefit from direct interactions with
elected officials in at least two ways. First, political access
may enable firms to secure contracts to provide goods or
services to government. Government procurement of goods
and services accounts for over 10% of the gross domes-
tic product in the US. Government officials may influence
the allocation of lucrative government contracts toward
firms whose executives have interacted with them. Sec-
ond, companies with direct access to politicians can seek
regulatory relief and influence political decision-making.
Companies in the US are subject to oversight from vari-
ous regulatory agencies (e.g., the Securities and Exchange
Commission, the Federal Trade Commission, the Consumer
Product Safety Commission, Food and Drug Administration,
Environmental Protection Agency, Occupational Safety and
Health Administration, and so on). Because politicians have
discretion in granting regulatory relief, they may provide
more regulatory relief to companies that have access to
the politicians. These considerations suggest that access to
politicians should be associated with increased firm value.
To investigate these relationships, we match the names
of visitors in the White House visitor logs to the names
of corporate executives of S&P1500 firms during the pe-
riod from January 2009 through December 2015. We be-
lieve that White House meetings are unique because they
are a direct form of face-to-face interaction between high-
level government officials and corporate executives.2 Face-
to-face meetings enable direct exchange of information
2
There are multiple ways that firms may choose to influence deci-
sions, ranging from political donations to hiring professional lobbyists to
running political ads in congressional districts. Although expenditures on
these activities can be measured, they are very indirect. In some cases
(e.g., campaign donations), it is only a measure of a desire or attempt
to build political connections. Any firm can make a campaign contribu-
tion, but not all firms can gain direct access to White House personnel.
In our empirical tests, we directly control for traditional measures of po-
and the building of mutual trust and understanding. We
recognize, however, that the ability to secure a meeting
with a top White House official is likely correlated with
the ability to access these officials in other ways as well
(e.g., phone calls, emails, etc.). Because we cannot directly
observe those other forms of access, we interpret White
House visits as a proxy for having the ability to secure di-
rect and timely political access.
We identify 2,401 meetings between corporate execu-
tives and federal government officials at the White House.
Our findings can be summarized as follows. First, in terms
of the prevalence and characteristics of firms with politi-
cal access, we find that about 11% of the firm-years have
executives who visit the White House. Because firms with
political access tend to be larger, these firm-years account
for about 40% of the total market capitalization of all firm-
years in the sample. Consistent with the notion that cam-
paign contributions “buy” access, we find that firms that
contributed more to Obama’s presidential election cam-
paigns are more likely to have access to the White House.
We also find that firms that spend more on lobbying, firms
that receive more government contracts, larger firms, and
firms with a greater market share are more likely to have
access to influential federal officials.
Second, we find that corporate executives’ meetings
with White House officials are followed by significant pos-
itive cumulative abnormal returns (CARs). For example, the
CAR is about 0.375% during a 12-day window surround-
ing the meetings (i.e., one day before to ten days after
the meetings). We find that this result is driven mainly by
closely connected firms, defined as those that contributed
more to Obama’s presidential campaign than his oppo-
nent’s. For instance, visits by close firms’ executives are
associated with a 12-day CAR of 0.512%, as compared to
0.274% for those by nonclose firms’ executives. Moreover,
we find significant positive CARs around the release of the
visitor logs, especially for visits that were not covered in
the media before the release of the logs. These results sug-
gest that White House visits are associated with significant
benefits for firms.
Third, to further examine the valuation effects associ-
ated with political access, we exploit the election of Don-
ald J. Trump as the 45th president of the US as a shock
to political access. We find that firms with access to the
Obama administration experience significantly lower stock
returns following the release of the election result than
otherwise similar firms. The economic magnitude is non-
trivial as well: after controlling for various factors that
are likely correlated with firms’ political activities, such
as campaign contributions, lobbying expenses, and gov-
ernment contracts, the stocks of firms with access to the
Obama administration underperform the stocks of other-
wise similar firms by about 70 basis points in the three
days immediately following the election. This result cor-
roborates our main finding that political access is of signif-
icant value to firms. It also helps alleviate the concern that
litical connection, specifically including campaign contributions and lob-
bying expenses. Thus, the relations we show between our political access
measure and various outcomes are orthogonal to these traditional mea-
sures.
 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431
the observed valuation effects associated with political ac-
cess are driven by confounding factors that are correlated
with both the timing of the meetings and stock returns.
Moreover, we find that the negative CAR around the 2016
presidential election for firms with access to the Obama
White House is driven primarily by close firms, suggest-
ing that political access enables firms that are supportive
of the president to reap significant benefits.
Last, we identify two channels through which politi-
cal access enhances firm value. Using a propensity score
matched sample of firms with political access (treatment
firms) and those without (control firms) and a difference-
in-differences approach, we find that treatment firms, rel-
ative to control firms, receive more government contracts
following the meetings than before the meetings. The eco-
nomic magnitude of this effect is meaningful: for exam-
ple, assuming a profit margin of 12.0% for winning bids in
procurement contracts (Bajari et al., 2014), the profits gen-
erated from incremental contract volume due to political
access represent a gain of about 8.0 basis points for the
average firm’s stock, which is about 12.4% of the average
12-day CAR around White House visits. We also find evi-
dence suggesting that treatment firms, relative to control
firms, secure more favorable regulatory actions following
the meetings than before the meetings.
Our paper contributes to the literature on the value of
political connections. A number of studies examine the in-
fluences of firms’ political activities and connections, such
as campaign contributions, lobbying, and politically con-
nected corporate executives and board members, on firm
outcomes.3 The existing studies in the US context focus
primarily on the legislative branch and find that, despite
the strong legal system of the US, companies with ties
to politicians in the legislative branch (typically inferred
from campaign contributions) are associated more favor-
able outcomes.4 We know of only two papers exploring
the value of political connections to the executive branch
in the US (Fisman et al., 2012 and Acemoglu et al., 2016),
which find mixed results.5 We are the first to show a di-
rect impact of personal interactions between the White
House and corporate executives on firm value. The exec-
3
For evidence in the US context, see, e.g., Lenway, Morck, and Yeung
(1996), Kroszner and Stratmann (1998), Ansolabehere Snyder, and Ueda
(2004), Jayachandran (2006), Cooper, Gulen, and Ovtchinnikov (2010), Yu
and Yu (2011), Fisman et al. (2012), Duchin and Sosyura (2012), Blanes
i Vidal et al. (2012), Goldman, Rocholl, and So (2009), Adelino and
Dinc (2014), Houston et al. (2014), Akey (2015), Acemoglu et al. (2016),
and Faccio and Hsu (2017). For evidence in the non-US or international
contexts, see, e.g., Fisman (2001), Johnson and Mitton (2003), Khwaja
and Mian (20 05), Faccio (20 06), Faccio, Masulis, and McConnell (2006),
Claessens, Feijen, and Laeven (2008), Faccio and Parsley (2009), and Faccio
and Zingales (2017).
4
For example, recent studies show that politically connected firms
earn higher future stock returns (Cooper, Gulen, and Ovtchinnikov, 2010),
secure more government contracts (Goldman, Rocholl, and So, 2009;
Faccio and Hsu, 2017), and obtain more government funding (Duchin and
Sosyura, 2012; Adelino and Dinc, 2014).
5 6
In particular, Fisman et al. (2012) find that the value of personal ties
to Vice President Richard Cheney is insignificantly different from zero,
suggesting that US institutions are effective in curbing rent-seeking by
politicians and corporations. Acemoglu et al. (2016), on the other hand,
show that political connections are associated with large increases in
stock valuation during the financial crisis.
417
utive branch is of independent interest because it oversees
much of the regulatory process in the US as well as the
awarding of government contracts.
The main contribution of our paper to the literature
is two-fold. First, we are the first to use the data on
White House visitors to identify physical interactions be-
tween corporate executives and influential politicians. The
detailed information in the visitor log data enables us to
provide a direct measure of political access and to provide
evidence on the allocation and valuation effects of political
access. The data also permit the identification of the exact
timing of corporate executives’ access to powerful politi-
cians, thereby allowing us to measure the valuation effects
using an event study approach. Second, our study adds to
the understanding of the value of political connections to
executive branch officials in the US. Because corporations
are often directly affected by decisions made by executive
branch agencies (e.g., the allocation of government pro-
curement contracts and regulatory enforcement decisions),
it is important to understand the value of ties to politicians
in the executive branch and the channels through which
such a valuation effect occurs. The evidence in our paper
suggests that access to high-level officials in the executive
branch can be an important source of competitive advan-
tage for firms. Our results also illuminate two channels,
i.e., government procurement contracts and regulatory re-
lief, through which political access affects firm value.
The rest of the paper is organized as follows.
Section 2 describes the data and summary statistics.
Section 3 presents the empirical results, and Section 4 con-
cludes.
2. Data and summary statistics
As part of its stated commitment to government trans-
parency, the Obama administration voluntarily released
records of White House visitors to the public online.6 Ac-
cording to the White House, aside from a small group of
particularly sensitive meetings (such as visits by potential
Supreme Court nominees) and purely personal guests of
the first and second families (i.e., visits that did not involve
any official or political business), the record of every visi-
tor who came to the White House for an appointment or
to conduct business was released. We obtained the visitor
logs data from the White House website near the end of
the Obama Administration. The data contain over 5.27 mil-
lion entries for visits during 2009–2015. Each visitor record
includes the first name, last name, and middle initial of the
visitor, the date and time of the appointment, the name
of the official being visited (i.e., the visitee), the number
of people present and the location of the meeting (e.g.,
the Oval Office or the Roosevelt Room). The information
in the visitor records that implicates personal privacy or
law enforcement concerns, including dates of birth, social
Visitor records from previous presidencies have not been released. A
2013 federal court ruling, Judicial Watch, Inc. v. United States Secret Ser-
vices, held that information on visitors to the office of a president was
covered by the president’s constitutional right to confidential communi-
cations and hence was not subject to Freedom of Information Act disclo-
sure requirements.
418 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431
security numbers, and contact phone numbers, were not
released. See the Appendix for a sample White House visi-
tor record released to the public.
To identify corporate executives who visit the White
House, we match the names of visitors in the White House
visitor logs to the names of corporate executives in the Ex-
ecuComp database during the period from January 2009
through December 2015. To focus on meetings that offer
more opportunities for private interactions between politi-
cians and corporate executives, we require that the num-
ber of participants at the meeting do not exceed 50. We
exclude visits by tourists. Specifically, we remove visits for
which the visitee or the caller is “Visitors Office” and visits
for which the description contains the word “tour.” We re-
quire the visitors’ first name, last name, and middle initial
to match exactly those of corporate executives in Execu-
Comp. We obtain a list of 4,564 visits after applying these
filters.
To ensure that a White House visitor is indeed the cor-
porate executive identified rather than someone else with
the same full name, we use web searches to check whether
the full name is associated with multiple people that are
potential visitors to the White House. For cases in which
the full name is associated with multiple potential visitors,
we rely on two additional pieces of information. First, since
visitors in the same White House meeting are likely to
have similar backgrounds, we use information of the other
visitors in the same meeting to verify whether a visitor is
indeed the corporate executive identified. We obtain infor-
mation on other visitors, especially those whose names are
more unique, through web searches. If the other visitors
are also corporate executives or in the same industry or
sector, then the visitor in question is likely to be the corpo-
rate executive identified. Second, because federal govern-
ment officials (i.e., the visitees) typically have a specified
area of responsibility and are likely to meet only with peo-
ple in that area, we use information on the visitee’s area
of responsibility as an additional check on the reliability of
the matching. For instance, a White House staffer that ad-
vises the president on economic policies is more likely to
meet with a corporate executive than with a pastor with
the same name.
Our final sample contains 2,401 meetings between cor-
porate executives and federal government officials at the
White House during the period from January 2009 through
December 2015. Panel A of Table 1 lists the names of cor-
porate executives who have more than ten visits to the
White House. The top four frequent visitors are David M.
Cote (chairman and CEO of Honeywell International, 30
visits), Jeffrey R. Immelt (executive chairman and CEO of
General Electric, 22 visits), Ursula Burns (chairman and
CEO of Xerox Corp., 21 visits), and Roger Altman (founder
and executive chairman of EverCore Partners Inc., 21 vis-
its). The frequent visitors are from a diverse set of indus-
tries including banking, healthcare, oil, utilities, communi-
cations, and consumer goods. Panel B of Table 1 lists the
names of the federal officials who are most frequently vis-
ited by corporate executives. The top three most frequent
visitees by corporate executives are the president (338 vis-
its), Valerie Jarrett (senior advisor to the president, 105 vis-
its), and Jeff Zients (assistant to the president for economic
policy and director of the National Economic Council, 103
visits).
Table 2 reports the summary statistics for the sample
of firms covered by S&P’s ExecuComp database from 2009
through 2015. The sample includes 12,427 firm-year obser-
vations. Firm-years in which the executives visit the White
House account for around 10.7% of the sample, suggesting
that a nontrivial fraction of the firms have political access.
Importantly, since firms with political access are typically
larger firms, they account for about 40% of the total mar-
ket capitalization of firms in the sample. The number of
visits by a firm-year has a mean of 0.309 and a standard
deviation of 1.793.
We obtain data on political campaign contributions and
lobbying from the Center for Responsive Politics (CRP) and
merge the CRP data with our firm-year sample by com-
pany name. We focus on political contributions to Barack
Obama’s election campaigns (i.e., the recipient is either
Barack Obama or the Obama Victory Fund). For compar-
ison, we also retrieve data on political contributions to
Obama’s Republican rivals in the general elections (i.e.,
John McCain in 2008 and Mitt Romney in 2012). For firm-
years between 2009 and 2012, we use the campaign con-
tributions in the 20 07–20 08 election cycle. For firm-years
between 2013 and 2015, we use the campaign contribu-
tions in the 2011–2012 election cycle. We also compute
the contributions made by corporate PACs to Democrats
and Republicans separately in the most recent election cy-
cle. The average firm in our sample contributes $12,0 0 0
and $14,0 0 0, respectively, to Obama’s presidential elec-
tion campaigns and his opponent’s campaigns. The aver-
age PAC contributions to Democrats and those to Repub-
licans in an election cycle are $36,0 0 0 and $47,0 0 0, re-
spectively. The average annual lobbying expenses are about
$554,0 0 0.
We obtain data on procurement contracts of the fed-
eral government of the United States from the US-
Aspending.gov website, which provides data from the Fed-
eral Procurement Data System (FPDS). The system pro-
vides detailed information on any federal contract with
a transaction value of at least $2,500 ($25,000 prior to
2004). The average firm receives $122.5 million worth
of procurement contracts from the federal government
annually.
Table 2 also shows summary statistics on other firm
characteristics. For example, about 1% of the firm-years are
“sin” stocks, namely alcohol, tobacco, and gaming stocks,
as defined in Hong and Kacperczyk (2009). The aver-
age firm-year has an annual revenue of $6.849 billion, a
market-to-book ratio of 2.896, a return on assets (ROA) of
3.5%, and 18,228 employees.
3. Empirical results
3.1. Characteristics of firms with political access
Government officials have limited time and attention
and can only interact with a limited set of corporate execu-
tives. Political scientists contend that elected officials grant
more access to interest groups that made more contribu-
tions to the officials’ election campaigns (e.g., Herndon,
 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431 419

Table 1
Frequent visitors and visitees of the White House
This table lists the names of corporate executives who are frequent White House visitors as well as the names of White House officials who are most
frequently visited by corporate executives during the period from January 2009 through December 2015.

Panel A: Corporate executives with more than ten visits to the White House

Company name FF48 industry Executive name Title # of visits

Honeywell International Inc. Auto & trucks David M. Cote Chairman and CEO 30
General Electric Co Consumer goods Jeffrey R. Immelt Executive chairman and CEO 21
Xerox Corp Consumer goods Ursula M. Burns Chairman and CEO 21
EverCore Partners Inc. Banking Roger C. Altman Founder and executive chairman 21
HCA Holdings Inc. Healthcare Charles J. Hall President of National Group 18
JPMorgan Chase & Co Banking James Dimon Chairman and CEO 18
AT&T Inc. Communication Randall L. Stephenson Chairman and CEO 18
BlackRock Inc. Trading Laurence D. Fink Co-founder, chairman, and CEO 16
Chevron Corp Oil John S. Watson Chairman and CEO 15
Dow Chemical Chemicals Andrew N. Liveris Executive chairman and CEO 15
Motorola Solutions Inc. Electronics Gregory Q. Brown Chairman and CEO 15
Duke Energy Corp Utilities James E. Rogers, Jr. Executive chairman and CEO 15
Southwestern Energy Co Oil Mark K. Boling Executive VP 15
Exxon Mobil Corp Oil Rex W. Tillerson Chairman and CEO 14
Goldman Sachs Group Inc. Trading Lloyd C. Blankfein Chairman and CEO 14
Graham Holdings Co Publishing Donald E. Graham Chairman and CEO 13
Dominion Resources Inc. Utilities Thomas F. Farrell, II Executive chairman and CEO 13
Cisco Systems Inc. Computers John T. Chambers Executive chairman 12
Knight Transportation Inc. Transportation Kevin P. Knight Chairman and CEO 12
Aetna Inc. Insurance Mark T. Bertolini Chairman and CEO 12
Unisys Corp Computers Edward C. Davies President of Federal Systems Business 11
Exelon Corp Utilities Christopher M. Crane President and CEO 11
NextEra Energy Inc. Utilities Lewis Hay, III Executive chairman 11
American Express Co Banking Kenneth I. Chenault Chairman and CEO 11
Comcast Corp Communication David L. Cohen Executive VP 11
Alphabet Inc. Business services Eric E. Schmidt Executive chairman 11

Panel B: White House officials most frequently visited by corporate executives

Visitee name Position title # of visits

Barack Obama President of the United States 338

Valerie Jarrett Senior advisor and assistant to the president for intergovernmental affairs and public engagement 105
Jeff Zients Assistant to the president for economic policy and director of the National Economic Council 103
Heather Zichal Deputy assistant to the president for energy and climate change 62
Greg Nelson Special assistant to the president and senior advisor for the National Economic Council 60
Gene Sperling Assistant to the president for economic policy and director of the National Economic Council 53
William Daley Assistant to the president and chief of staff 43
Nancy-Ann Deparle Assistant to the president and deputy chief of staff for policy 42
Austan Goolsbee Chief economist and chairman of the Council of Economic Advisers 39
Dan Utech Deputy assistant to the president for energy and climate change 33
Jason Furman Assistant to the president and principal deputy director of the National Economic Council 33
Ari Matusiak Special assistant to the president and director of private sector engagement 30
Adam Hitchcock Special assistant 29
Stephen Moilanen Staff assistant 26
Lawrence Summers Assistant to the president for economic policy and director of the National Economic Council 25
Rahm Emanuel Assistant to the president and chief of staff 23
Jack Lew Assistant to the president and chief of staff 21
John Podesta Counselor to the president 21

1982; Gopoian, 1984; Kalla and Broockman, 2016). We
thus expect the likelihood of political access to increase
with campaign contributions. From a demand perspective,
firms with more exposure to government policies should
be more likely to seek political access. For example, firms
that receive more government contracts, firms that spend
more heavily on lobbying, and firms that have a larger
market share are likely to be more exposed to government
policies and may seek more political access.
We run multivariate regressions to examine which firm
characteristics are associated with political access. We con-
sider the following explanatory variables: campaign con-
tributions to President Obama’s election campaigns and
those to his opponents’ campaigns, PAC contributions, lob-
bying expenses, government procurement contracts, firm
size, market share, and other firm and industry characteris-
tics as well as industry fixed effects and year fixed effects.
We cluster standard errors by firm.
Table 3 presents the regression results. The first two
columns are ordinary least squares (OLS) regressions with
the logarithm of one plus the number of White House
visits in a given year as the dependent variable, and the
last two columns are probit regressions with an indicator
variable for whether the firm’s executives visit the White
420 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431

Table 2
Summary statistics.
This table reports the summary statistics for the sample of firms covered by Standard & Poor’s ExecuComp database from 2009 through 2015. The sample
includes 12,427 firm-year observations. # of White House visits is the number of White House visits by corporate executives in a year. Political access is an
indicator that takes the value of one if the executives of the firm visit the White House at least once in a given year and zero otherwise. Contributions to
Obama is the firm’s total dollar amount of political contributions to Barack Obama’s election campaigns. Contributions to opponent is the firm’s total dollar
amount of political contributions to John McCain’s 2008 election campaigns or to Mitt Romney’s 2012 campaigns. For firm-years between 2009 and 2012,
we use the campaign contributions in the 20 07–20 08 election cycle. For firm-years between 2013 and 2015, we use the campaign contributions in the
2011–2012 election cycle. PAC contributions to Democrats is the firm’s total amount of contributions to Democrat candidates made through its corporate
PACs during the most recent election cycle. PAC contributions to GOP is the firm’s total amount of contributions to Republican candidates made through its
corporate PACs during the most recent election cycle. Lobbying expenses is the total dollar amount of lobbying expenses in a year. Procurement contracts
is the total dollar value of government procurement contracts awarded in a year. Sin stocks is the union of the Fama and French (1997) industry groups
4 (alcohol) and 5 (tobacco) along with the North American Industry Classification System (NAICS) group for gaming (following Hong and Kacperczyk,
2009). Firm size is annual sales. Market-to-book is the book value of common equity divided by the market value of common equity. Prior stock return
is the cumulative stock return during the prior 12 months. Tangible is the ratio of property, plant, and equipment to total assets. ROA is income before
extraordinary items (Compustat item IB) divided by total assets. Book leverage is the ratio of total debt to the book value of total assets. # of employees is
the number of employees (in thousands). Market share is the firm’s share in the total sales of its industry. Herfindahl index is the sum of the squares of the
percentages of a firm’s sales in its industry.

Variable Mean Median S.D. P25 P75

Political access 0.107 0.000 0.310 0.000 0.000

# of White House visits 0.309 0.000 1.793 0.000 0.000
Contributions to Obama ($ mil) 0.012 0.000 0.071 0.000 0.004
Contributions to opponent ($ mil) 0.014 0.000 0.074 0.000 0.005
PAC contributions to Democrats ($ mil) 0.036 0.000 0.294 0.000 0.000
PAC contributions to GOP ($ mil) 0.047 0.000 0.248 0.000 0.000
Lobbying expenses ($ mil) 0.554 0.000 1.975 0.000 0.190
Procurement contracts ($ mil) 122.495 0.000 1,397.310 0.000 1.065
Sin stocks 0.010 0.000 0.098 0.000 0.000
Firm size ($ mil) 6,848.820 1,484.780 21,531.340 528.969 4,707.680
Market-to-book 2.896 2.036 8.260 1.285 3.387
Prior stock return 0.195 0.175 0.419 –0.013 0.376
Tangible 0.235 0.149 0.236 0.053 0.345
ROA 0.035 0.041 0.111 0.010 0.080
Book leverage 0.537 0.518 0.262 0.355 0.690
# of employees (thousands) 18.228 4.612 43.894 1.440 14.100
Market share 0.014 0.003 0.036 0.001 0.009
(Market share)2 0.001 0.000 0.009 0.000 0.000
Herfindahl index 0.062 0.051 0.059 0.030 0.071

House in a given year as the dependent variable.7 We lag
the independent variables by one year. It should be noted
that the results are not intended to imply causation, but
instead, they indicate a correlation between firm character-
istics and political access. Consistent with the notion that
campaign contributions “buy” political access, the coeffi-
cients on the logarithm of one plus campaign contributions
to Obama’s election campaigns are positive and highly sig-
nificant.
In terms of economic magnitude, model 4 suggests
that an interquartile range increase in the log of one plus
the contributions to Obama’s campaigns (about 8.161) in-
creases the probability of gaining access to the White
House by 1.63 percentage points, which is economically
large compared to an unconditional probability of 10.7% (as
Table 1 shows). In contrast, contributions to Obama’s Re-
publican presidential rival do not significantly predict ac-
cess to the Obama administration, indicating that the re-
lation between campaign contributions and political ac-
cess is candidate specific. PAC contributions to Democrats
positively and significantly predict the number of visits to
Obama’s White House, whereas those to Republicans are a
7
We run similar regressions with access to the president or top aides
as the dependent variable. The results, reported in Table IA-1 in the In-
ternet Appendix, are qualitatively similar to those obtained here.
negative, but insignificant, predictor. These results provide
suggestive evidence that partisan leaning may play a role
in determining political access.
Table 3 also shows that firms that spend more on lob-
bying, firms that receive more government contracts, and
firms that have a large market share are associated with an
increased probability of gaining access to the White House.
These results are consistent with these firm characteris-
tics being associated with greater exposure to government
policies and hence a greater demand for political access.
We also find that larger firms are associated with increased
political access, which may be because of high fixed costs
of gaining access to politicians. There is mixed evidence
on the relation between firm performance and political ac-
cess: while past stock returns positively predict political
access, operating performance (i.e., ROA) is either nega-
tively or insignificantly associated with political access.
3.2. Stock price reaction to white house visits
We calculate cumulative abnormal stock returns around
corporate executives’ visits to the White House to evalu-
ate the stock return effects. Fig. 1 plots the CARs from 5
trading days before corporate executives’ White House vis-
its to 20 trading days after. We calculate abnormal returns
as the return in excess of Center for Research in Security
 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431 421

Table 3
Characteristics of firms with political access.
This table presents regression analysis of the characteristics of firms with political access. The first two columns esti-
mate OLS regressions with the logarithm of one plus the number of White House visits by corporate executives as the
dependent variable, and the last two columns estimate probit regressions with an indicator for political access as the
dependent variable. The political access indicator takes the value of one if the executives of the firm visit the White
House at least once in a given year and zero otherwise. All regressions include year fixed effects and industry fixed
effects. Numbers in parentheses are t-statistics based on standard errors clustered by firm. Significance at the 10% (∗ ),
5% (∗ ∗ ), or 1% level (∗ ∗ ∗ ) is indicated.

OLS Probit

Dependent variable = Log(1+# of White House visits) Political access indicator

(1) (2) (3) (4)

Log (1 + Contributions to Obama) 0.003 0.003 0.003 0.002

(2.17)∗ ∗ (1.72)∗ (3.31)∗ ∗ ∗ (3.11)∗ ∗ ∗
Log (1 + Contributions to opponent) –0.001 –0.000 –0.001 –0.001
(0.71) (0.08) (1.02) (0.76)
Log (1 + PAC contributions to Dem) 0.008 0.006 0.003 0.003
(2.26)∗ ∗ (1.97)∗ ∗ (1.63) (1.59)
Log (1 + PAC contributions to GOP) –0.004 –0.003 –0.002 –0.002
(1.25) (0.96) (1.34) (1.26)
Log (1 + Lobbying expenses) 0.005 0.005 0.004 0.004
(4.28)∗ ∗ ∗ (3.91)∗ ∗ ∗ (6.39)∗ ∗ ∗ (6.36)∗ ∗ ∗
Log (1 + Procurement contracts) 0.020 0.017 0.001 0.001
(3.06)∗ ∗ ∗ (2.73)∗ ∗ ∗ (0.96) (0.77)
Sin stocks 0.037 0.008 0.034 0.028
(0.74) (0.14) (0.78) (0.66)
Log (Firm size) 0.052 0.054 0.028 0.029
(8.36)∗ ∗ ∗ (5.85)∗ ∗ ∗ (10.60)∗ ∗ ∗ (6.09)∗ ∗ ∗
Market-to-book 0.000 0.000 –0.000 –0.000
(0.71) (0.67) (0.09) (0.23)
Prior stock return 0.023 0.019
(3.10)∗ ∗ ∗ (3.16)∗ ∗ ∗
Tangible –0.018 –0.013
(0.52) (0.71)
ROA –0.118 –0.007
(3.66)∗ ∗ ∗ (0.24)
Book leverage –0.044 –0.002
(1.80)∗ (0.17)
# of employees –0.015 –0.005
(2.17)∗ ∗ (1.26)
Market share 2.424 0.418
(3.19)∗ ∗ ∗ (1.92)∗
(Market share)2 –4.909 –1.076
(1.56) (1.48)
Herfindahl index 0.018 0.026
(0.14) (0.48)
Number of observations 12,415 12,415 12,170 12,170
Adj./Pseudo R-squared 0.16 0.17 0.22 0.22

Prices (CRSP) value-weighted market returns. On average,
the CAR during the 26-day window is around 0.567%.8
We use event study methodology to examine the stock
performance around White House visits.9 The upper panel
of Table 4 reports the CARs over three different windows
8
If campaign contributions were the true cost of gaining access to
powerful politicians, it would appear that the return on corporations’
campaign contributions is astronomical: the estimates in Table 3 and the
CARs indicate that an increase of $1 in campaign contributions is asso-
ciated with an increase of over $1,0 0 0 in stock value. However, it is im-
portant to note that campaign contributions may represent the tip of an
iceberg of the cost of gaining political access. Besides donating to politi-
cians’ election campaigns, firms may undertake other activities, e.g., lob-
bying and hiring former government officials, to secure access.
9
We also examine the CARs around cancelled visits. Table IA-2 in the
Internet Appendix shows that the CARs around cancelled visits are in-
significant. This result is consistent with the notion that the actual inci-
dence of the meetings matters for firm value. It is also consistent with
surrounding the date of the visit (day 0), i.e., 7 (–1 to
+5), 12 (–1 to +10), and 17 (–1 to +15) days.10 The CARs
are positive and significant across all three windows. For
example, the average 12-day CAR is 0.375%. It is likely
that firms that visit the White House may have additional
forms of access, such as the ability to pick up the phone
and directly call an official. Thus, our results likely capture
a slightly broader impact of political connectedness and
the idea that these planned meetings are less important, which explains
why they got cancelled.
10
Recent studies show that stock market reactions to political news ex-
hibit drifts. For example, Cohen et al. (2013) find that the stock prices
drift for three months following legislative votes even though the infor-
mation about the votes is available in the public domain (see Fig. 2 in
their paper). Wagner et al. (2018) find that it takes about four trading
days for the market to incorporate the information about the 2016 presi-
dential election outcome.
422 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431

Fig. 1. Cumulative abnormal returns around corporate executives’ White House visits. This figure plots the cumulative abnormal returns around corporate
executives’ visits to the White House. We consider a window from 5 days before to 20 days after the date of the visit (day 0). Abnormal returns are
calculated as the return in excess of CRSP value-weighted market returns.

Table 4 and the president. We define “close” firms as those that

Cumulative abnormal returns around corporate executives’ White House
contributed more to the presidential campaign of Obama
visits.
This table presents cumulative abnormal returns around corporate ex- than that of his opponent. Nonclose firms are otherwise.
ecutives’ visits to the White House. We consider three different win- Consistent with the idea that political access is particularly
dows surrounding the date of the visit (day 0), i.e., [–1, +5], [–1, +10], valuable for close firms, the lower panel of Table 4 shows
and [–1, +15]. Abnormal returns are calculated as the return in excess that the abnormal returns associated with White House
of CRSP value-weighted market returns. Close firms are those that con-
visits are especially pronounced for visits by close firms’
tributed more to the presidential campaign of Obama than that of his
opponent. Nonclose firms are otherwise. Numbers in parentheses are t- executives. For example, the 12-day CAR for visits by close
statistics based on standard errors clustered by firm. Significance at the firms’ executives is 0.512%, as compared to 0.274% for those
10% (∗ ), 5% (∗ ∗ ), or 1% level (∗ ∗ ∗ ) is indicated. by nonclose firms’ executives. The difference between the
# of obs. [–1, +5] [–1, +10] [–1, +15] two CARs, however, is insignificant.
Second, we partition the visits into those that are men-
All visits 2,401 0.236% 0.375% 0.392%
(2.26)∗ ∗ (2.92)∗ ∗ ∗ (2.51)∗ ∗ ∗ tioned in the news media and those that are not. We start
Partition by visiting firms by extracting news articles from the Cline Center news
Close firms 1,011 0.315% 0.512% 0.513% database that contain three sets of keywords, a) “White
(2.00)∗ ∗ (2.50)∗ ∗ (2.10)∗ ∗ House” or the name of the visitee, b) the name of the ex-
Nonclose firms 1,390 0.179% 0.274% 0.304%
ecutive or the company name, and c) at least one word in-
(1.27) (1.64) (1.45)
dicating a meeting (i.e., “meet,” “meets,” “met,” “meeting,”
“meetings,” “attend,” “attends,” “attending,” “lunch,” and
“lunches”), during the period from the date when the ap-
access than the visit itself. For example, if corporate exec- pointment is made to one month after the meeting date.12
utives have phone calls with White House officials within We obtain 24,827 news articles that satisfy these criteria.
the event window, these effects would be included in our We then manually check each news article to determine
estimate. Also, the observed abnormal returns could be whether it mentions the White House meeting in ques-
driven by some important event that is connected to the tion. For meetings that are mentioned multiple times in
White House visit (e.g., the allocation of procurement con- the news media, we only retain the first news article. If
tracts that could be affected by political access). the news article is published after the market closes, we
We partition the sample in two ways to examine cross- use the next trading day as the publication date. We iden-
sectional variation in the CARs.11 First, we partition the tify 252 visits (10.5% of our sample) that are mentioned
sample by the strength of the connection between the firm in the news. Not surprisingly, the majority of the meetings
that are covered by the news media are between CEOs (as
11
Table IA-3 in the Internet Appendix partitions the sample by the iden-
tity of visitees. We find that the abnormal returns are driven mainly by
12
meetings with the president and his top aides. For example, the average The news database is based on a web crawler developed by
12-day CAR for meetings with the president and the top aides is 0.749%, the Cline Center for Advanced Social Research, which scans approx-
as compared to 0.235% for those with other officials. These results could imately 6,500 news feeds from around the world. The database
be because meetings with top-level federal officials are particularly bene- contains over 81 million news articles for the period between
ficial for firms or because such meetings are more visible to investors due 2006 to present. See https://clinecenter.illinois.edu/project/data-science/
to media coverage. global- news- archive for a more detailed description.
 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431 423

Fig. 2. Cumulative abnormal returns around corporate executives’ White House visits: subsamples partitioned by whether the visits are mentioned in the
media. This figure plots the cumulative abnormal returns around corporate executives’ visits to the White House partitioned by whether the visits are
mentioned in the news media. We consider a window from 5 days before to 20 days after the event date (day 0). We use the publication (meeting) date
as the event date for meetings that are (not) mentioned by the media. Abnormal returns are calculated as the return in excess of CRSP value-weighted
market returns. The solid line represents the CAR for visits mentioned in the media, and the dotted line represents that for visits not mentioned.

opposed to other corporate executives) and the president
or his senior officials.
Fig. 2 plots the CAR from –5 to +20 days surrounding
the publication date (day 0) for the meetings that are men-
tioned in the news media and that surrounding the meet-
ing date for the meetings that are not mentioned.13 The
observed positive announcement return is concentrated
among meetings that are covered in the media. For ex-
ample, meetings that are mentioned in the news exhibit
a significant positive CAR of about 1.0% during a 26-day
window, as compared to a CAR of 0.5% for meetings that
are not mentioned in the news. This is expected given the
publicity that these meetings receive and the fact that they
tend to involve high-level government officials and top ex-
ecutives. It is worth pointing out that information about
the meetings not covered in our news database might be
available in the public domain (e.g., in tweets or blogs)
around the time of the meetings, which might explain the
positive CAR for these noncovered meetings.
The Obama administration releases the visitor records
with a three-month lag. Thus, for visits that the market
was unaware of before the release of the logs, the market
should react positively to the release. We therefore con-
duct similar event studies around the release date of the
visitor logs and present the results in Table 5. We find that
the release of the visitor records is associated with posi-
tive abnormal stock returns. For example, the upper panel
of Table 5 shows that the CAR over a 12-day window, i.e.,
from day –1 to +10 relative to the release date, is 0.258%
(with a t-statistic of 1.95).
To shed light on how the CAR around the release date
varies with whether the information about the visit be-
came public before the release, we partition the sample by
whether the visit was previously mentioned in the news
13
The average time lag between a meeting and the first news report is
one day.
media using the Cline Center news database. The lower
panel of Table 5 shows that the positive CAR associated
with the release of the logs is driven mainly by those that
were not covered in the media.14 For example, the 12-
day CAR is 0.306% and significant at the 5% level for visits
that were not mentioned, as compared to –0.160% for visits
that were mentioned. Since the Cline Center news database
does not cover all public information outlets, information
about the meetings not mentioned in the database might
be available in the public domain (e.g., in tweets or blogs)
before the release of the logs. Also, it is possible that so-
phisticated traders such as hedge funds may obtain and
trade on information about the meetings before the re-
lease of the logs (Gao and Huang, 2016). Thus, we cau-
tion that the CAR for non-covered meetings around the
release date may only partially capture the actual impact
of these meetings on firm value. Because it is difficult to
precisely pinpoint the time when the public becomes
aware of a given White House visit, we believe that both
the CAR around the meeting date and that around the re-
lease date of the visitor logs provide useful estimates of
the market’s expectations about the impact of the visits on
firm value.
We conduct various robustness tests of the results on
the CAR around corporate executives’ visits to the White
House. First, we exclude White House visits that are asso-
ciated with the president’s advisory board meetings. There
is substantial vetting that goes on as part of advisory
board selection, and the White House may know more
about people sitting on the advisory boards and their com-
panies than the markets may know—thus it is possible
that people chosen for advisory boards may be selected
14
We consider multiple visits by executives of the same company that
are released on the same date as one observation, which is why the num-
ber of observations in Table 5 is slightly smaller than that for the meet-
ings in Table 4.
424 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431

Table 5
Cumulative abnormal returns around the release date of visitor logs.
This table presents cumulative abnormal returns around the release date of visitor logs. We consider three different windows
surrounding the release date (day 0), i.e., [–1, +5], [–1, +10], and [–1, +15]. Abnormal returns are calculated as the return in
excess of CRSP value-weighted market returns. The lower panel splits the visits into those that were previously mentioned
in the news and those that were not mentioned. Numbers in parentheses are t-statistics based on standard errors clustered
by firm. Significance at the 10% (∗ ), 5% (∗ ∗ ), or 1% level (∗ ∗ ∗ ) is indicated.

# of obs. [–1, +5] [–1, +10] [–1, +15]

All visits 2,188 0.136% 0.258% 0.258%

(1.15) (1.95)∗ (1.73)∗
Partition by prior news coverage
Previously mentioned in the news 227 –0.184% –0.160% –0.465%
(0.70) (0.49) (1.19)
Not mentioned 1,961 0.173% 0.306% 0.342%
(1.34) (2.10)∗ ∗ (2.11)∗ ∗

Table 6
Robustness checks.
This table reports robustness checks of the cumulative abnormal returns around corporate executives’ visits to the White
House. Panel A excludes visits that are associated with advisory board meetings. Panel B excludes visits that are within
12 months of the previous visits. Panels C, D, and E use alternative risk benchmarks to adjust returns, including industry-
adjusted stock returns (following Moskowitz and Grinblatt, 1999), the Fama-French-Carhart four-factor model, and DGTW
characteristics benchmarks. Numbers in parentheses are t-statistics based on standard errors clustered by firm. Significance
at the 10% (∗ ), 5% (∗ ∗ ), or 1% level (∗ ∗ ∗ ) is indicated.

# of obs. [–1, +5] [–1, +10] [–1, +15]

Panel A: Excl. advisory board meetings 2,305 0.286% 0.389% 0.425%

(2.71)∗ ∗ ∗ (3.04)∗ ∗ ∗ (2.73)∗ ∗ ∗
Panel B: Excl. follow-up visits 1,058 0.313% 0.558% 0.545%
(1.91)∗ (2.70)∗ ∗ ∗ (2.27)∗ ∗
Panel C: Industry-adjusted returns 2,401 0.231% 0.325% 0.358%
(2.34)∗ ∗ (2.84)∗ ∗ ∗ (2.47)∗ ∗
Panel D: FFC-adjusted returns 2,396 0.209% 0.197% 0.327%
(2.01)∗ ∗ (1.57) (2.17)∗ ∗
Panel E: DGTW characteristics-adj. returns 2,120 0.244% 0.362% 0.360%
(2.40)∗ ∗ (3.02)∗ ∗ ∗ (2.43)∗ ∗

from firms that are likely to have above average outcomes.
We identify corporate executives who are members of the
president’s advisory boards, including the President’s Man-
agement Advisory Board, the President’s Council on Jobs
and Competitiveness, the President’s Global Development
Council, and the President’s Export Council. We retrieve
the dates and locations of advisory board meetings from
the White House website. We are able to identify 94 vis-
its by corporate executives in our sample that are part of
the president’s advisory board meetings. It is useful to note
that some of the board meetings are already filtered out of
our baseline sample due to our criteria of limiting to vis-
its with fewer than 50 participants. We exclude the visits
that are part of advisory board meetings and repeat our
tests. The results, reported in Panel A of Table 6, show that
our results continue to hold, suggesting that the observed
positive CARs associated with White House visits are not
driven by the selection process for advisory boards.
Second, we exclude follow-up visits by executives of a
given company because these visits may be less of a sur-
prise to the market. We define follow-up visits as those
that are within 12 months of the previous visits. Panel B of
Table 6 shows that the results generally become stronger
after excluding follow-up visits. For example, the 12-day
CAR is 0.558% after excluding follow-up visits, as compared
to 0.375% for the full sample of visits.
Third, to address the concern that the results may be
driven by industry effects, we compute industry-adjusted
stock returns by subtracting from the daily return of each
stock the daily return of the corresponding industry (fol-
lowing Moskowitz and Grinblatt, 1999) and repeat the
test using the industry-adjusted returns. Panel C of Table
6 shows that the results continue to hold, suggesting that
the abnormal returns associated with White House visits
are likely firm specific and are not explained by industry-
wide stock returns.15
Last, we use the Fama-French-Carhart four-factor model
and Daniel et al. (DGTW, 1997) characteristics benchmarks
to adjust returns. Panels D and E of Table 6 shows that the
15
White House visits of a company’s executives may have two oppo-
site effects on its peers. On the one hand, if the benefits associated with
White House visits we observe are at the expense of the peer firms, one
may expect the peer firms to experience negative stock returns around
these visits. On the other hand, if the visits have positive spillover ef-
fects on the peers (e.g., regulations that benefit all firms in an industry),
the peer firms should experience positive returns. In untabulated analysis,
we examine the stock price reactions of the peer firms of the companies
whose executives visit the White House. We define the peers of a firm
with a visit to the White House as those that are in the same indus-
try and with similar size (i.e., those in the same four-digit SIC industry
and with sales revenue between 50% and 200% of that of the firm under
consideration) but do not visit the White House during the 12 months
centered around the visit. Consistent with the results reported here using
industry-adjusted returns, we find that peer firms experience insignifi-
cant returns around these events. For example, the average 12-day CAR
for peer firms is 0.325% (with a t-statistic of 1.41). This result suggests
that the two effects roughly cancel each other out.
 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431
results are similar to our baseline results, suggesting that
the abnormal returns are not explained by risk differences
or differences in stock characteristics such as size, market-
to-book ratios, and prior stock returns.
3.3. Stock price reaction to the 2016 presidential election
To further examine the valuation effects associated with
political access, we exploit the election of Donald J. Trump
as the 45th president of the US as a shock to political
access. Prior to the election, it was widely expected that
Hillary Clinton would win the election. For example, the
market price in prediction markets such as the Iowa Elec-
tronic Market on the day before the election implies that
the probability of a Clinton presidency was about 80%.
Thus, the election of Donald J. Trump as the president
represents a negative shock to firms that had access to
the White House during the Obama administration. Impor-
tantly, the timing of the election is predetermined, miti-
gating the concerns about endogenous timing of political
access. If political access is of significant value to firms,
firms with greater access to the Obama administration, and
hence a continuing Democratic administration, should ex-
perience lower stock returns when the election result be-
came known. To test this, we run the following regression:
CARi = α + β × Pol itical Accessi + γ Xi + Industr yi + εi ,
(1)
where CARi is the cumulative market-adjusted abnormal
returns of stock i during a three-day window immedi-
ately following the release of the election result (i.e., from
November 9 to November 11, 2016); PoliticalAccessi is ei-
ther an indicator that takes the value of one if the ex-
ecutives of the firm visit the White House at least once
during the Obama administration and zero otherwise or
the log of one plus the number of visits to the White
House by the firm’s executives during our sample pe-
riod; Xi is a vector containing firm-level control variables;
and Industryi is industry fixed effects. The control vari-
ables include those used in Table 3 such as contributions
to presidential election campaigns, PAC contributions to
Democrats or Republicans, lobbying expenses, government
procurement contracts, firm size, market-to-book, leverage,
and sales growth. We aggregate the dollar value of cam-
paign contributions, lobbying expenses, and procurement
contracts during the sample period from 2009 through
2015. We use stock price run-up, measured using the cu-
mulative market-adjusted stock return during the 40-day
window immediately before the election, to control for an
anticipation effect. In addition, we control for effective cor-
porate tax rates and foreign operations, because there were
major differences in tax and trade policies favored by the
two candidates that may affect firms differently (Wagner
et al., 2018). We cluster standard errors by industry. If the
election of Trump constitutes a negative shock to firms
with access to the Obama administration, we expect the
coefficient on the political access variable to be negative
and significant.
Panel A of Table 7 presents the results estimating Eq.
(1). Models 1 and 3 only include the political access vari-
425
ables and industry fixed effects as the explanatory vari-
ables. The coefficients on both political access variables are
negative and significant. The economic magnitude is large:
for example, model 1 suggests that the stocks of firms with
access to the Obama administration underperform those
of same-industry firms without access by 1.3 percentage
points in three-day CARs. In other models we include firm-
level controls as additional regressors. The magnitude of
the coefficients on the political access variables becomes
slightly smaller but remains statistically and economically
significant. For example, model 2 suggests that after con-
trolling for various factors that are likely correlated with
firms’ political activities, such as campaign contributions,
lobbying expenses, and government contracts, the stocks
of firms with access to the Obama administration under-
perform the stocks of otherwise similar firms by about
70 basis points in the three days immediately following
the election. This result is consistent with our main find-
ing that political access is of significant value to firms, al-
though it is also consistent with the view that Democrats
and Republicans have different policy platforms, which are
reflected in stock prices (Knight, 2007). The prescheduled
election helps alleviate the concern that the valuation ef-
fects associated with corporate executives’ meetings with
federal officials are driven by confounding factors that are
correlated with both the timing of the meetings and stock
returns (e.g., CEOs may choose to visit the White House
when they have positive private information about their
companies).
Panel A of Table 7 also reveals a number of interesting
patterns. Firms with high stock price run-ups before the
election are associated with lower stock returns after the
release of the election result, suggesting that the market
was surprised by the election result. In other words, as the
market increased its belief in a Clinton presidency before
the election, stocks that would benefit (suffer) from a Clin-
ton administration experienced a positive (negative) run-
up. The outcome of the election showed that this belief
was wrong, thus reversing the returns incurred during the
run-up period. Consistent with Wagner et al. (2018), we
find that firms that pay higher taxes are associated with
higher CARs, whereas firms with more foreign operations
underperform. It is worth noting that the negative relation
between the CARs and the political access variables con-
tinue to hold after controlling for these variables, suggest-
ing that the political access events we identify have inde-
pendent effects on stock valuation.
If political access enables closely connected firms to ob-
tain political favors, the negative returns associated with
access to Obama’s White House around the 2016 elec-
tion should be particularly pronounced for firms with close
ties with the administration. To test this, we add inter-
action terms combining political access and an indicator
for close firms. The results, reported in Panel B of Table
7, show that the interaction terms have negative and sig-
nificant coefficients, suggesting that firms with access to
Obama’s White House and having close ties to the ad-
ministration are hit particularly hard by the election re-
sult. For example, column 2 shows that firms with access
to Obama’s White House underperform those without by
1.6 percentage points in the three days following the elec-
426 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431

Table 7
Stock market reactions to the 2016 presidential election.
This table presents regression analysis of the stock market reaction to the election of Donald J. Trump as the president of
the US on November 8, 2016. The dependent variable the three-day cumulative abnormal return immediately following the
release of the election result (i.e., from November 9 to November 11, 2016). Abnormal returns are calculated as the return in
excess of CRSP value-weighted market returns. Panel A examines the relation between the CAR and political access variables,
and Panel B examines how the relation varies with the strength of the connection between the president and the visiting
firm. Political access is an indicator that takes the value of one if the executives of the firm visit the White House at least
once during the Obama administration and zero otherwise. Number of visits is the number of visits to the White House
by the firm’s executives during our sample period. Stock price run-up is the cumulative abnormal return during the 40-day
window immediately before the election. Cash effective tax rate is cash taxes paid as a fraction of current year pretax income,
adjusted for special items. Foreign operation is foreign pretax income as a fraction of total pretax income. Close firm is an
indicator that equals one if the firm contributed more to the presidential campaign of Obama than that of his opponent.
We aggregate the dollar value of campaign contributions, lobbying expenses, and procurement contracts during the sample
year from 2009 through 2015. See Table 2 for the definition of other variables. All regressions include industry fixed effects.
Numbers in parentheses are t-statistics based on standard errors clustered by industry. Significance at the 10% (∗ ), 5% (∗ ∗ ),
or 1% level (∗ ∗ ∗ ) is indicated.

Panel A: Relation between CAR and political access variables

Dependent variable = Three-day CAR

(1) (2) (3) (4)

Political access –0.013 –0.007

(2.85)∗ ∗ ∗ (1.98)∗
Log (1+ # of visits) –0.011 –0.007
(3.71)∗ ∗ ∗ (2.52)∗ ∗
Log (1 + Contributions to Obama) –0.001 –0.001
(3.20)∗ ∗ ∗ (3.09)∗ ∗ ∗
Log (1 + Contributions to opponent) 0.000 0.000
(1.21) (1.16)
Log (1 + PAC contributions to Dem) –0.001 –0.001
(0.82) (0.74)
Log (1 + PAC contributions to GOP) 0.000 0.000
(0.32) (0.30)
Log (1 + Lobbying expenses) –0.000 –0.000
(0.99) (0.90)
Log (1 + Procurement contracts) 0.003 0.003
(2.74)∗ ∗ ∗ (2.83)∗ ∗ ∗
Stock price run-up –0.065 –0.065
(3.53)∗ ∗ ∗ (3.53)∗ ∗ ∗
Sin stocks 0.010 0.009
(0.51) (0.46)
Log (Firm size) 0.004 0.004
(0.91) (0.99)
Market-to-book 0.000 0.000
(1.82)∗ (1.89)∗
Tangible –0.002 –0.003
(0.12) (0.15)
ROA –0.064 –0.064
(2.54)∗ ∗ (2.52)∗ ∗
Book leverage 0.000 –0.000
(0.04) (0.04)
# of employees –0.001 –0.001
(0.46) (0.50)
Market share –0.504 –0.487
(4.35)∗ ∗ ∗ (4.31)∗ ∗ ∗
(Market share)2 0.679 0.663
(3.74)∗ ∗ ∗ (3.63)∗ ∗ ∗
Herfindahl index 0.091 0.087
(1.85)∗ (1.77)∗
Cash effective tax rate 0.027 0.027
(3.06)∗ ∗ ∗ (3.15)∗ ∗ ∗
Foreign operation –0.023 –0.023
(2.97)∗ ∗ ∗ (2.98)∗ ∗ ∗
Number of observations 2,977 1,926 2,977 1,926
Adj. R-squared 0.12 0.24 0.13 0.24
(continued on next page)
 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431 427

Table 7
(continued)

Panel B: Cross-sectional relation between CAR and political access variables

Dependent variable = Three-day CAR

(1) (2) (3) (4)

∗
Political access Close firm –0.016 –0.016
(2.59)∗ ∗ (1.99)∗
Political access –0.007 –0.002
(1.27) (0.49)
∗
Log (1+ # of visits) Close firm –0.010 –0.011
(2.51)∗ ∗ (2.33)∗ ∗
Log (1+ # of visits) –0.007 –0.003
(1.84)∗ (0.96)
Close firm –0.001 0.011 –0.001 0.010
(0.29) (1.79)∗ (0.34) (1.77)∗
Control variables No Yes No Yes
Number of observations 2,977 1,926 2,977 1,926
Adj. R-squared 0.12 0.24 0.13 0.24

tion when they are closely connected to the administration change in real outcomes around the White House visits for
than when they are not. This result is consistent with a fa- treatment firms with that for control firms.
voritism interpretation of our results.

3.4.1. Government procurement contracts

3.4. White house visits and real outcomes
To examine the influence of political access on the allo-
cation of government procurement contracts, we compare
Access to powerful politicians may enable firms to se-
the change in government procurement contracts around
cure contracts to provide goods or services to government
the White House visits for treatment firms with that for
and to seek regulatory relief.16 We use a difference-in-
control firms. We calculate the change in government pro-
differences approach to examine whether political access
curement contracts as the total dollar value of procure-
influences real outcomes of corporations. We first use a
ment contracts awarded during the 12 months immedi-
propensity score matching procedure to construct a sample
ately following a White House visit scaled by sales minus
of control firms that are statistically identical in all observ-
that during the 12 months immediately before the visit
able dimensions except that their executives do not visit
scaled by sales. We cluster standard errors by firm.
the White House. We compute the propensity scores using
Table 8 reports the results. Treatment firms, relative to
model 4 in Table 3.
control firms, receive more government contracts follow-
We use a one-to-one nearest neighbor matching with
ing the meetings than before the meetings. The economic
replacement (Heckman et al., 1997). For each firm whose
magnitude of this effect is nontrivial. For example, the
executives visit the White House (treatment firm), we
DiD estimate shows that the change in procurement con-
identify a control firm with the closest propensity score.
tract volume as a fraction of sales around the White House
This procedure ensures that a treatment firm is paired
visits is 0.457 percentage points higher for treatment firms
with a control firm with statistically the same prior cam-
than for control firms.
paign contributions, lobbying expenses, government con-
To gauge the effect of the increase of government con-
tracts, size, market-to-book, prior stock return, year, in-
tracts on the CAR of treatment firms, we perform a back-
dustry membership, etc. We require that the observations
of-the-envelope calculation. We first multiply the DiD es-
have nonmissing values of these characteristics and the
timate for the dollar value of procurement contracts over
matching firms fall in the common support of estimated
sales by the average sales of the firms, which provides an
propensity scores. We are able to match 2183 treatment
estimate of the incremental contract volume due to po-
firms to similar control firms.17 We then compare the
litical access. To gauge the pecuniary gains from winning
these contracts, we need to multiply the incremental con-
16
Access to politicians may enable companies to gain an informational tract volume by the profit margin on government procure-
advantage about government policies and actions and to help resolve po- ment contracts. We use the median profit margin of 12.0%
litical uncertainty. A growing literature shows that political uncertainty
negatively impacts corporate investment (e.g., Julio and Yook, 2012; Kelly,
for winning bids in procurement contracts in the US esti-
Pastor, and Veronesi, 2016; Gulen and Ion, 2016). Gaining direct access mated by Bajari et al. (2014). Thus, the average firm gen-
to influential policymakers can help companies become better informed erates $17.38 (=0.00457∗ $31,694×12.0%) million in prof-
about the inner workings of the government and the policy-making pro- its from incremental contract volume due to political ac-
cess, which can help mitigate political uncertainties and improve cor-
cess. Since the average firm has a market capitalization of
porate decision-making. We find suggestive evidence that investment by
firms with political access becomes less negatively affected by policy un- $37,237 million, this represents a gain of about 4.67 basis
certainty after the White House visits. We report the results in Table IA-4
in the Internet Appendix.
17
We report diagnostic tests of the propensity score matching proce- cant differences in any of the firm characteristics between treatment and
dure in Table IA-5 in the Internet Appendix. The table shows no signifi- matched control firms after the matching process.
428 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431

Table 8 contracts are those that describe the requirements in terms

White House visits and the allocation of government procurement con-
tracts.
This table compares the change in government procurement contracts for
firms whose executives visit the White House (treatment firms) with that
for matched firms using a propensity score matching procedure (control
firms). We measure the change in procurement contracts as the total dol-
lar value of procurement contracts awarded during the 12 months imme-
diately following a White House visit scaled by sales minus that during
the 12 months immediately before the visit scaled by sales, in percentage
points. Panel A reports the change in procurement contracts for the full
sample as well as for subsamples of close and nonclose firms. Close firms
are those that contributed more to the presidential campaign of Obama
than that of his opponent. Nonclose firms are otherwise. Panel B reports
the difference in the change in procurement contracts by type between
treatment and control firms. We partition contracts in two ways: whether
the contract is awarded under full and open competition and whether it
is performance based. Numbers in parentheses are t-statistics based on
standard errors clustered by firm. Significance at the 10% (∗ ), 5% (∗ ∗ ), or
1% level (∗ ∗ ∗ ) is indicated.
of results required, use measurable performance standards
and quality assurance surveillance plans, and include per-
formance incentives where appropriate.
These two dimensions—competition and performance—
allow us to sort firms into four segments of a two-by-
two matrix. Panel B of Table 8 shows that the increase in
government procurement contracts is driven primarily by
those that are not awarded under full and open compe-
tition and are not performance based. For example, con-
tracts that are not awarded under full and open compe-
tition and are not performance based account for about
58% (=0.264/0.457) of the increase. These results provide
suggestive evidence that political access enables treatment
firms to secure government contracts with less competi-
tion and less government oversight.

Panel A: Change in all procurement contracts

Treatment Control
(1)
Full sample 0.299
(1.66)∗
Partition by visiting firms
Close firms 0.423
(1.28)
Nonclose firms 0.180
(1.09)
Panel B: Breakdown of the change in procurement contracts by type
Performance based Nonperformance based
Competitive 0.103
(1.77)∗
Noncompetitive 0.021
(0.93)
points for the firm’s stock, which is about 12.4% of the av-
erage 12-day CAR around White House visits.
The increase in government procurement contracts as-
sociated with political access may be particularly pro-
nounced for firms that are closely connected with the
Obama administration. We repeat the test on the subsam-
ple of close firms and nonclose firms separately. Panel A
of Table 8 shows that the change in government procure-
ment contracts following the visits by executives of close
firms is 0.706 percentage points, as compared to 0.218 per-
centage points for nonclose firms. The difference between
these two estimates, however, is insignificant.
To shed light on the composition of the increase in
contract volume experienced by treatment firms follow-
ing the meetings, we partition government contracts along
two dimensions. First, we group contracts into those that
are awarded under full and open competition and those
that are not awarded under full and open competition.
The Federal Acquisition Regulation allows contracts to be
awarded on noncompetitive terms under certain speci-
fied circumstances (e.g., when only one source satisfies
agency requirements or when there is an unusual and
compelling urgency in the need for the supplies or ser-
vices). Second, we group contracts into performance-based
and nonperformance-based contracts. According to the
Federal Acquisition Regulation, performance-based service
3.4.2. Regulatory relief
Difference
(2) (3)
Political access may enable firms to obtain special treat-
ment by regulatory agencies. We identify regulatory relief
–0.158 0.457
using a novel approach. We obtain regulatory news from
(1.35) (2.16)∗ ∗
CapitalIQ Key Developments data set. We require that the
–0.283 0.706 news fall into one of three event types as defined by Cap-
(1.25) (1.80)∗ italIQ, i.e., key development event types 205 (Regulatory
–0.038 0.218 Authority: Regulations), 206 (Regulatory Authority: Com-
(0.65) (1.25)
pliance), and 207 (Regulatory Authority: Enforcement), and
mention the name of a federal agency in the executive
branch. We first categorize regulatory news articles as pos-
itive or negative based on the relative fraction of posi-
0.068
tive and negative words in the articles. We then count
(1.12)
0.264 the number of positive and negative regulatory news be-
(1.74)∗ fore and after the White House visits for both treatment
firms and control firms. Specifically, we use the word list
compiled by Loughran and McDonald (2011) to categorize
words as either positive or negative. We classify a regu-
latory news article as positive (negative) if the difference
between the proportion of positive words in the news and
that of negative words is in the top (bottom) tercile. We
then compare the change in the number of net positive
(i.e., positive minus negative) regulatory news for firms
whose executives visit the White House (i.e., treatment
firms) with that for control firms.
The following is an example of regulatory news from
the CapitalIQ data set concerning our sample firms that is
categorized as positive by our procedure:
“Regions Financial Corp. resolved an inquiry by the Se-
curities and Exchange Commission regarding a previ-
ous arrangement between AmSouth Bank, AmSouth As-
set Management and BISYS Fund Services Inc., an out-
side company which provided fund administration and
other services to the former AmSouth Funds and many
other mutual fund families. Regions cooperated fully
and extensively with the SEC in this investigation and
is pleased to resolve the matter. The arrangements in
question date back to 1999 and involved a portion of
the administration fee paid by the funds to BISYS be-
ing rebated to AmSouth to pay for marketing and other
expenses related to the AmSouth Funds. The arrange-
ments ended in 2004 and AmSouth disclosed the SEC
inquiry in 2005.”
 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431
Table 9
White House visits and regulatory news.
This table compares the change in the number of net positive (positive
minus negative) regulatory news regulatory news for firms whose execu-
tives visit the White House (treatment firms) with that for matched firms
using a propensity score matching procedure (control firms) after the vis-
its. We use the word list compiled by Loughran and McDonald (2011) to
categorize words as either positive or negative. We classify a regulatory
news article as positive (negative) if the difference between the propor-
tion of positive words in the news and that of negative words is in the top
(bottom) tercile. We report the average number of net positive regulatory
news articles during the 12 months immediately following a White House
visit minus that during the 12 months immediately before the visit, in
percentages for treatment and control firms using the full sample as well
as using subsamples of close and nonclose firms. Close firms are those
that contributed more to the presidential campaign of Obama than that
of his opponent. Nonclose firms are otherwise. Numbers in parentheses
are t-statistics based on standard errors clustered by firm. Significance at
the 10% (∗ ), 5% (∗ ∗ ), or 1% level (∗ ∗ ∗ ) is indicated.
Treatment Control Difference
(1) (2) (3)
Full sample 1.019 –2.500 3.519
(1.18) (1.98)∗ ∗ (2.27)∗ ∗
Partition by visiting firms
Close firms 1.714 –2.377 4.091
(1.18) (1.84)∗ (2.02)∗ ∗
Nonclose firms 0.795 –2.546 3.341
(0.77) (1.54) (1.73)∗
An example of negative regulatory news from the data
set:
“The Consumer Financial Protection Bureau took action
against EZCORP, Inc. for illegal debt collection practices.
These tactics included illegal visits to consumers at
their homes and workplaces, empty threats of legal ac-
tion, lying about consumers’ rights, and exposing con-
sumers to bank fees through unlawful electronic with-
drawals. The Bureau ordered EZCORP to refund $7.5 mil-
lion to 93,0 0 0 consumers, pay $3 million in penalties,
and stop collection of remaining payday and install-
ment loan debts owed by roughly 130,0 0 0 consumers.
It also bars EZCORP from future in-person debt collec-
tion. In addition, the Bureau issued an industry-wide
warning about collecting debt at homes or workplaces.
The CFPB found that EZCORP collected debts from
consumers through unlawful in-person collection vis-
its at their homes or workplaces, risked exposing con-
sumers’ debts to third parties, falsely threatened con-
sumers with litigation for non-payment of debts, and
unfairly made multiple electronic withdrawal attempts
from consumer accounts, causing mounting bank fees.
The CFPB alleges that EZCORP violated the Electronic
Fund Transfer Act and the Dodd-Frank Wall Street Re-
form and Consumer Protection Act’s prohibition against
unfair and deceptive acts or practices.”
Table 9 reports the results on the change in the num-
ber of net positive news articles around White House vis-
its. The results show that treatment firms experience an
increase of 0.010 (although statistically insignificant) in the
number of net positive regulatory news articles during the
12 months immediately following a White House visit rel-
ative to that during the 12 months immediately before
429
the visit. In contrast, control firms experience a decrease
of 0.025 (statistically significant at the 5% level) in the
number of net positive regulatory news articles follow-
ing a White House visit. The difference-in-differences es-
timate in the last column shows that, compared to control
firms, treatment firms experience an increase of 0.035 in
the number of net positive regulatory news after the visits
than before the visits. These results are consistent with the
hypothesis that political access enables firms to obtain reg-
ulatory relief. The economic magnitude is nontrivial con-
sidering that the change in the number of net positive reg-
ulatory news has a mean of –0.0074 and a standard devia-
tion of 0.463.
We then repeat the test on the subsample of close
firms and nonclose firms separately. Table 9 shows that
the change in the number of net positive regulatory news
following the visits by executives of close firms is 0.041
and that for visits by nonclose firms’ executives is 0.033.
The difference between these two numbers, however, is in-
significant.
4. Conclusion
In this paper, we use a data set on White House vis-
itors to identify corporate executives’ access to influen-
tial government officials. We find that about 10.7% of the
firm-years have executives who visit the White House, ac-
counting for about 40% of the total market capitalization
of firm-years in the sample. Consistent with money buy-
ing access, we find that political access is positively cor-
related with firms’ contributions to politicians’ election
campaigns. We also find that corporate executives’ White
House visits are associated with positive abnormal stock
returns both around the visits and the release of the visitor
logs. We further find evidence suggesting that following
meetings with federal government officials, firms receive
more government contracts and are more likely to receive
regulatory relief (as measured by the tone of regulatory
news). Using the 2016 presidential election as a shock to
firms’ political access, we find that firms with access to the
Obama administration deliver significantly lower stock re-
turns following the release of the election result than oth-
erwise similar firms that do not have access. The negative
returns for firms with access to the Obama White House
around the 2016 presidential election are particularly pro-
nounced for firms with close ties to the administration.
Overall, our results provide evidence suggesting that po-
litical access is of significant value to corporations.
Political economists provide contrasting views about
the social welfare implications of firms deriving value from
political access. At one end of the spectrum, gaining ac-
cess to politicians may enable firms to gain undue influ-
ence over elected officials and to extract political favors
(see, e.g., Baye et al., 1993; Grossman and Helpman, 1994;
Zingales, 2017). Under such a view, political access facili-
tates quid pro quo exchanges between firms and elected
officials in which policy favors are exchanged for gains to
the politicians. At the other end of the spectrum, however,
political access may enable firms to provide policy-relevant
information, which in turn helps elected officials to make
more informed decisions on policies that affect the firms
430 J.R. Brown and J. Huang / Journal of Financial Economics 138 (2020) 415–431
(see, e.g., Austen-Smith, 1995, 1998; Cotton, 2009). Future
research could disentangle these potential explanations.
Appendix: sample redacted White House visitor record
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