Download or read book Lobbying as a Hedge on Political Risk written by Pierre J. Jaffard and published by . This book was released on 2020 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: I develop a three-period asset pricing model with heterogeneity in firms size and a government that introduces a policy distortion. I find that large firms can better hedge the political uncertainty associated with this policy change through lobbying, which leads them to earn lower expected returns. I provide two strands of empirical evidence consistent with the model predictions. The first one looks at the behavior of a blue versus red industries around the unexpected results of the 2016 US Presidential election. The second one uses portfolio sorting and double-sorting to reach consistent conclusions.