Donation Patterns & Political Connections

This study focuses on firms that donated to foundations allegedly controlled by a key political figure. By examining the stock market reaction during South Korea's historic first presidential impeachment, we explore how politically connected entities respond when faced with major political crises.

The Impeachment Event

We analyze the stock returns of these "donor" firms following this significant political event triggered by a major corruption scandal. The research investigates whether there are financial costs associated with such drastic political changes for businesses perceived as aligned with the impeached leader.

Real-Time Market Reactions

Using tick-by-tick market data, we track how stock prices fluctuated during key moments of this politically charged process. Our analysis reveals that firms linked to the president's circle demonstrated notable financial vulnerability when his removal was imminent.

Key Findings & Significance

• Abnormal returns decreased significantly after the president was removed from office
• Stock price movements correlated strongly with constitutional court decisions during impeachments
• This research provides crucial insights into political risk assessment by capital markets

This study demonstrates that politically connected firms may face substantial financial penalties when a crisis leads to their leader's removal, offering policymakers new perspectives on corporate political alignment.