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RESEARCH PRODUCT

Revolving doors: are they valued in the Spanish stock market?

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Purpose The purpose of this paper is to examine the effect of political connections in the value of companies listed on the Spanish stock market. Design/methodology/approach The authors study two issues on this topic: the impact on the company value of the appointment as director of an ex-politician through an event study; and the long run stock market performance of companies with political connections. The authors employ a sample of listed firms in the Spanish stock market for which the authors collected data about their political connections. The authors perform the study during a wide period (1996-2011), comprising four legislatures. Findings The results show that from the market perspective the value ex-politicians bring to the company outweigh their costs, especially in times of crisis or economic recession. Originality/value Given the concern of regulators and legislators to increase transparency and good governance of companies, this paper shed light on the role that politicians play on the company boards and and their contribution to their value.