Wednesday, August 19, 2009

Investigations: Insider Trading Profits From U.S. Coup Decisions

Coups are good for business! Stocks of U.S. companies with operations abroad rose 1.4 percent in the four days after the U.S. government authorized a coup d'├ętat in the country where the companies were based - and three percent in the 13 days after such a decision. That's the interesting revelation in a new study by economists at Harvard, Berkeley and Stockholm University.
Note that they're talking about the time right after the coup was authorized, not the time after it actually took place. More stock increases were found after the coup authorization than after the coup itself, raising questions about insider trading based on knowledge of the coming coup or buying by U.S. government personnel with that knowledge. Read Slate's story on the study here.