The Returns to Lobbying on Trade Policy: Evidence from TPP

We provide systematic evidence that lobbying by firms on trade agreements matters for their stock prices. We leverage a unique shock to U.S. trade policy – the unexpected victory of Donald Trump in the 2016 U.S. presidential election, and the de facto U.S. withdrawal from the Trans-Pacific Partnership (TPP). We find that stocks of companies that advocated for TPP underperformed, experiencing a reduction in share prices by 1.68%. Further, firms whose lobbying efforts were prominently covered in online news media and those lobbying on provisions of particular interest to the U.S. faced more pronounced losses.