Effects of Top Managers' Cabinet Appointments on Shareholders' Wealth

Abstract

The article presents information on a study which examined how the appointment of a top executive to a federal government cabinet post affects the firm's stock value. The author describes the use of abnormal stock returns to assess the effects of several changes in top-level management. Findings are presented in relation to the standardized abnormal returns and cumulative standardized abnormal returns. The author focuses on the financial benefit to stockholders of strategic cabinet appointments.