Tag Archives: politics

The Real Problem from Trading by Politicians: Information Sharing that Erodes Market Efficiency 

By | December 22, 2023
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Trading by politicians is increasingly scrutinized, with recent legislation prohibiting trading by politicians being introduced in Congress. There have been numerous scandals involving insider trading, such as trading prior to COVID lockdowns or trading ahead of government contract awards or FDA reports. Some politicians, however, claim that restrictions on their trading violates their economic freedom… Read More »

Policy Uncertainty, Earnings Management, and the Role of Political Connections 

By | May 9, 2022
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Political decisions shape the operating environment for the economy as well as the individual firm. Political and regulatory reactions to the Global Financial Crisis, government shutdowns, or major tax reforms number prominently among them. As reactions from political actors are rarely clear-cut ex ante, grave crises give rise to political uncertainty.  Political uncertainty affects economic… Read More »

Political Influence and Regulatory Enforcement

By | August 11, 2021
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In April of 2010, a coal dust explosion at an underground coal mine in West Virginia killed 29 miners, constituting the worst mining disaster in the U.S. since 1970. An independent, state-led investigation of the accident concluded that regulatory capture was one cause of the tragedy. Political clout that the mine owner, Massey Energy, gained… Read More »

Cruel and Unusual Circumstances: The Fed’s Use and Misuse of Penalty Rates

By | June 21, 2021
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After a political and legislative showdown at the end of 2020, Congress closed the Fed’s most novel Section 13(3) emergency lending facilities—the ones aimed most directly at Main Street. These facilities—supported by Treasury funds allocated by the Coronavirus Aid, Relief, and Economic Security (CARES) Act—lent only a fraction of their stated maximum lending limits, leaving many criticizing the programs’ overly punitive… Read More »