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Interest group activity and long-run stock market performance

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  • Dennis Coates
  • Bonnie Wilson

Abstract

This paper provides evidence that interest group activity is negatively related to aggregate stock market performance. In particular, the ¯ndings imply that a one percent increase in the number of interest groups in a country is associated with a reduction in average annual stock market returns of roughly 2-5%, and a reduction in the volatility of annual stock returns of roughly 6-14%. In addition, the ¯ndings indicate that many of the same fundamentals that drive economic growth also explain stock market performance.
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Suggested Citation

  • Dennis Coates & Bonnie Wilson, 2007. "Interest group activity and long-run stock market performance," Public Choice, Springer, vol. 133(3), pages 343-358, December.
    • Handle: RePEc:kap:pubcho:v:133:y:2007:i:3:p:343-358
    DOI: 10.1007/s11127-007-9191-8
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    Cited by:

    1. Dennis Coates & Jac Heckelman & Bonnie Wilson, 2011. "Special-interest groups and growth," Public Choice, Springer, vol. 147(3), pages 439-457, June.
    2. Theresa Hager, 2020. "Special Interest Groups and Growth: A Meta-Analysis of Mancur Olsons Theory," ICAE Working Papers 116, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    3. Papadimitri, Panagiota & Pasiouras, Fotios & Pescetto, Gioia & Wohlschlegel, Ansgar, 2021. "Does political influence distort banking regulation? Evidence from the US," Journal of Financial Stability, Elsevier, vol. 53(C).
    4. Domenico Rossignoli, 2015. "Too many and too much? Special-interest groups and inequality at the turn of the century," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 130(3), pages 337-366.
    5. Robert F. Salvino & Gregory M. Randolph & Geoffrey K. Turnbull & Michael T. Tasto, 2019. "The effects of decentralization on special interest groups," Public Choice, Springer, vol. 181(3), pages 191-213, December.

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    More about this item

    Keywords

    Special interest groups; Institutional sclerosis; Stock returns; Volatility; D7; G1; G3; L5; O16;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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