Washington Policy Analysts and the Propagation of Political Information
Daniel Bradley, Sinan Gokkaya, Xi Liu, Roni Michaely
Management Science · 2024 · Volume 70 · Issue 8
Abstract
Washington policy research analysts (WAs) monitor political developments and produce research to interpret the impact of these events. We find institutional clients channel more commissions to brokerages providing policy research and commission-allocating institutional clients generate superior returns on their politically sensitive trades. We find that WA policy research reports are associated with significant price and volume reactions. Finally, we find sell-side analysts with access to WA issue superior stock recommendations on politically sensitive stocks. These effects are particularly acute during periods of high political uncertainty. Overall, we uncover a unique and an important conduit through which political information filters into asset prices. This paper was accepted by David Sraer, finance. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4919 .
Keywords
policy analysts, policy research, political uncertainty, trading commissions, institutional trading, sell-side analysts
Enable JavaScript for citation tools and additional paper interactions.