Abstract
We analyze the response of asset prices to the assassination of President William McKinley in 1901. During his term in office, the largest wave of merger activity in American history occurred, yet McKinley did not attempt to enforce the Sherman Act against the firms. By contrast, his vice president, Theodore Roosevelt, was known to be interested in restraining corporate combinations. We find that firms that had engaged in mergers saw greater declines in their abnormal returns following McKinley’s assassination. We also study the market’s response to the first antitrust suit initiated by Roosevelt once he took office and find similar patterns, which confirms the importance of antitrust enforcement in the response of asset prices. Roosevelt’s accession caused a significant change in the approach to antitrust, not from new legislation but from more aggressive enforcement of existing law.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 837-873 |
| Number of pages | 37 |
| Journal | Journal of Law and Economics |
| Volume | 66 |
| Issue number | 4 |
| DOIs | |
| State | Published - Nov 1 2023 |
Funding
We thank Paul Rhode, Timothy Guinnane, and Peter Rousseau for their thoughtful suggestions. We would also like to thank seminar participants at Baylor University; the Federal Reserve Board of Governors; University of Michigan; Harvard University; Stanford University; University of California, Los Angeles; University of California, Santa Barbara; University of Miami; University of Toronto; University of Pennsylvania; and Yale University. In addition, we owe special thanks to Cristina Ferlauto, Miranda Miao, Alex Mitchell, Shrey Santosh Shetye, and Katherine Strair for research assistance.
ASJC Scopus subject areas
- Economics and Econometrics
- Law