The England football team are perennial underachievers. Every major tournament sees them exit well before the semi-final stages and after every exit there is the usual inquest into why it happened. The usual suspects are tactics (England should have played a 4-3-3 instead of a 4-2-3-1), tired players, unrealistic press expectations, bored players, and injuries to key players. Imagine my shock when I read a Daily Telegraph article at breakfast this morning which blamed England's early exit on market capitalism! Click here to read the article.
Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...