Purpose

What information do members of Congress (politicians) use when they trade stocks? The purpose of this paper is to attempt to answer this question by investigating the relationship between an aggregate measure of trading by members of Congress (aggregate congressional trading) and future stock market returns.

Design/methodology/approach

The authors follow the empirical framework used in academic work on corporate insiders. In particular, they aggregate 61,998 common stock transactions by politicians over the 2004–2010 period and estimate time series regressions at a monthly frequency with heteroskedasticity and autocorrelation robust t-statistics.

Findings

The authors find that aggregate congressional trading predicts future stock market returns, suggesting that politicians use economy-wide (i.e. macroeconomic) information in their stock trades. The authors also present evidence that aggregate congressional trading is related to the growth rate of industrial production, suggesting that industrial production serves as a potential channel through which aggregate congressional trading predicts future stock market returns.

Originality/value

To the best of the authors’ knowledge, this study is the first to document a relationship between aggregate congressional trading and stock market returns. The media and scholarly attention on politicians’ trades have mostly focused on the question of whether politicians have superior information on individual firms. The results from this study suggest that politicians’ informational advantage may go beyond individual firms such that they potentially have superior information on the overall trajectory of the economy as well.

中文翻译：

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国会交易和股市总回报

目的

国会议员（政客）在交易股票时使用哪些信息？本文的目的是试图通过调查国会议员的总体交易衡量标准（国会总交易）与未来股票市场回报之间的关系来回答这个问题。

设计/方法/方法

作者遵循企业内部人员学术工作中使用的经验框架。特别是，他们汇总了 2004-2010 年期间政界人士进行的 61,998 次普通股交易，并以具有异方差性和自相关稳健t统计量的每月频率估计时间序列回归。

发现

作者发现，国会总交易可以预测未来的股市回报，这表明政治家在他们的股票交易中使用了经济范围内（即宏观经济）的信息。作者还提出证据表明国会总交易与工业生产的增长率有关，这表明工业生产是国会总交易预测未来股市回报的潜在渠道。

原创性/价值

据作者所知，这项研究首次记录了国会总交易与股票市场回报之间的关系。媒体和学术界对政客行业的关注主要集中在政客是否对个别公司拥有更好的信息这一问题上。这项研究的结果表明，政治家的信息优势可能超越个别公司，因此他们也可能对经济的整体轨迹拥有更好的信息。