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Who Pays a Visit to Brussels? Firm Value Effects of Cross-Border Political Access to European Commissioners

Published online by Cambridge University Press:  14 February 2024

Kizkitza Biguri  and
Jörg R. Stahl Open the ORCID record for Jörg R. Stahl [Opens in a new window]
Kizkitza Biguri
Affiliation:
OsloMet Oslo Business School kizkitza.biguri@oslomet.no
Jörg R. Stahl*
Affiliation:
Universidade Católica Portuguesa - Católica Lisbon School of Business & Economics
*
jstahl@ucp.pt (corresponding author)
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Abstract

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This study analyzes meetings of firms with policymakers at the European Commission (EC). Meetings with Commissioners are associated with positive abnormal equity returns for U.S. firms. Firms of the European Union (EU), however, do not experience significant value increases. We identify regulatory outcomes as a channel that can rationalize this difference in value effects of political access. U.S. firms with meetings are more likely to receive favorable decisions in their EC merger decisions than their EU peers. The results suggest that cross-border political access can alleviate uncertainties and alleged discriminatory behavior of regulators in foreign markets.

Information

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 60 , Issue 2 , March 2025 , pp. 948 - 973
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
Copyright
© The Author(s), 2024. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

We thank Beatriz Andrade and Moritz Vetter for excellent research assistance and Renée Adams, Stefan Anchev, Ioannis G. Asimakopoulos, Thorsten Beck, Christopher Bleibtreu, Peter Claeys, Tim Eisert, Alexander Fink, Jill Fisch, Sturla Fjesme, Javier Gomez-Biscarri, Martin Götz, Rainer Haselmann, Tarek Hassan, Swarnodeep Homroy, Jonathan Karpoff, Shimon Kogan, Chiara Lacava, Thomas Lambert, Christian Leuz, Tatyana Marchuk, Øyvind Norli, Livia Pancotto, Enrico Perotti, Vincenzo Pezone, Emile Sartre, Antoinette Schoar, Paul Wachtel, Alexander Wagner, Tracy Wang, Cornelia Woll, Mohammed Zakriya, and Stefan Zeume as well as the participants at the 2022 Paris December Finance Meeting, 2020 American Finance Association Meeting, 2020 Helsinki Workshop on Finance and Politics, 2019 European Finance Association Meeting, 2019 Financial Management Association Meeting, 2019 ZEW Public Finance Conference, 2018 Paris Financial Management Conference, 2018 SAEe, 2018 CESifo Workshop on Political Economy, 2018 Finance Forum, 2018 CEUS Workshop on European Economics, Goethe Finance Brown Bag Seminar, and Frankfurt Center on the Foundations of Law and Finance Seminar for helpful comments. Biguri gratefully acknowledges the financial support of the “BI Basic Research Grant, 2016.” Stahl gratefully acknowledges research funding by grants UID/GES/00407/2020 and PTDC/EGE-ECO/6041/2020 of the Portuguese Foundation for Science and Technology (FCT). The article has benefited significantly from a fellow visit ofStahl at the Center for Advanced Studies Foundations of Law and Finance funded by the German Research Foundation (Deutsche Forschungsgemeinschaft, DFG) – project FOR 2774.

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