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Estimating the Value of Connections to Vice-President Cheney

Author

Listed:
  • Fisman David

    (University of Toronto)

  • Fisman Raymond J.

    (Columbia Business School)

  • Galef Julia
  • Khurana Rakesh

    (Harvard University)

  • Wang Yongxiang

    (University of Southern California, Marshall School)

Abstract

We estimate the market valuation of personal ties to Richard Cheney. Our proxies for personal ties are based on corporate board linkages that are prevalent in the network sociology literature. We consider a number of distinct political and personal events that either affected Cheney’s political fortunes or his ability to hand out political favors. Specifically, we consider: (a) market reaction of connected companies to news of Cheney’s heart attacks; (b) market reaction of connected companies to Cheney’s being placed in charge of the vice-presidential search process and his surprise self-appointment; (c) correlation of the value of connected companies with the probability of a Bush victory in 2000; and (d) correlation of the value of connected companies with the probability of war in Iraq. Contrary to conventional wisdom, we find that in all cases, the value of ties to Cheney is precisely estimated as zero. We interpret this as evidence that U.S. institutions are effective in controlling rent-seeking through personal ties with high-level government officials.

Suggested Citation

  • Fisman David & Fisman Raymond J. & Galef Julia & Khurana Rakesh & Wang Yongxiang, 2012. "Estimating the Value of Connections to Vice-President Cheney," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(3), pages 1-20, December.
    • Handle: RePEc:bpj:bejeap:v:13:y:2012:i:3:p:1-20:n:5
    DOI: 10.1515/1935-1682.3272
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