Abstract
This paper uses anecdotal evidence to identify a group of firms that had significant ties to President Lyndon Johnson and determines the effect of Johnson's unexpected rise to the Presidency on the market value of these firms. The unexpected nature of President Kennedy's death eliminates the confounding event problem typically associated with election results. We are able to identify four separate portfolios of firms that had political ties to Lyndon Johnson. Our research suggests that the market expected significant benefits to accrue to these firms as a result of Johnson's becoming President.
When Catholic John Kennedy and Johnson were running together in 1960 a joke hop-scotched around the parties in Texas and Washington that Kennedy had told Johnson, “Lyndon, when we get elected I'm going to dig a tunnel to the Vatican,” and Lyndon had replied, “That's OK with me as long as Brown & Root gets the contract” (Dugger, 1982: 286).
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I am grateful to Mike Maloney, Bobby McCormick, Gary Santoni, and Raymond Sauer for helpful comments. The usual disclaimer applies.
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Brown, W.O. Friends in high places: The wealth effects of JFK's assassination on the assets of LBJ's supporters. Public Choice 86, 247–256 (1996). https://doi.org/10.1007/BF00136521
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DOI: https://doi.org/10.1007/BF00136521