I have examined the common stock investments made by members of the U.S. Senate between 2006 and 2009. I find that the average stock portfolio in the Senate exhibits one and two year cumulative abnormal returns (CARs) of -0.15 % and 0.43%, respectively. This suggests that members of the Senate are not trading on insider knowledge as indicated by one previous researcher who calculated a one year CAR of 25%. However, my findings are in line with another previous researcher who found a one year CAR of about -2% and concluded that Congressmen are not trading on inside information. I also examine election-year trades made by senators who lose a reelection bid. This cashing out effect amounts to a CAR of 0.43% during the first year post loss, but after two years these trades exhibit a CAR of -0.03%. The cashing out group performs no better than the group as a whole, indicating that this group did not use their informational advantage to profit during the lame duck session.
| Identifer | oai:union.ndltd.org:CLAREMONT/oai:scholarship.claremont.edu:cmc_theses-1110 |
| Date | 01 January 2011 |
| Creators | Yingling, Scott T |
| Publisher | Scholarship @ Claremont |
| Source Sets | Claremont Colleges |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | CMC Senior Theses |
| Rights | © 2011 Scott Yingling |
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