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Political connections and stock returns: evidence from the Boulangist campaign, 1888–1889
Published online by Cambridge University Press: 25 January 2019
Abstract
The decade of the 1880s was a turbulent period for the French Third Republic. Corruption scandals that discredited republican parties and a lacklustre economic performance after the Paris Bourse crash of 1882 gave rise to widespread public disenchantment with the republican political elites. The rise of the Boulangist movement was the most representative example of this disillusionment. In 1887, Georges Boulanger, an army general and former minister of war, began orchestrating a populist mass campaign against the ruling republicans and the parliamentary regime. His political agitation, supported by a heterogeneous coalition of socialists, radicals and royalists, reached a climax in January 1889, when, after winning a Paris by-election, he had an opportunity to stage a coup d’état, which did not materialise. To understand whether French investors perceived the Boulangist campaign as a real threat to their interests, I use an original dataset of daily stock prices to analyse the effect of the January 1889 by-election on the value of politically connected firms listed on the Paris Bourse. The results show that firms with links to the republican parties experienced positive cumulative abnormal returns after Boulanger's refusal to stage the coup, while there was no effect on firms connected to the royalist parties or with no political ties. These findings suggest that French investors reacted positively to the prospective subsiding of the Boulangist movement.
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- Copyright © European Association for Banking and Financial History e.V. 2019
Footnotes
I would like to thank the editors of the Financial History Review, participants in the FHR Fast-Track Workshop in Turin, and the anonymous referees for their useful suggestions. I am deeply indebted to the Marie Curie Initial Training Network MACROHIST, funded under the European Union's Seventh Framework Programme, which gave me the opportunity to spend two years at Sciences-Po as an Early-Stage Researcher. Thanks to Germán Forero Laverde for all the helpful comments. Many thanks also to Sciences-Po and Guillaume Sarrat des Tramezaigues for their strong support during these years. I am grateful to my supervisor Carlos Santiago-Caballero, as well as to Roberto Galbiati, Quoc-Anh Do, Stéphane Guibaud, Angelo Riva, Robert Hauswald, and participants in the annual conference of the Economic History Society at Keele University (UK), for their advice and comments on earlier drafts. Finally, I owe a huge debt of gratitude to the Centre des Archives Économiques et Financières (CAEF), to the Archives du Crédit Agricole, and, particularly, to Nicolas Gueugneau for the invaluable help provided during my archival work. All remaining errors are mine.
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