By Peter Coy
(Bloomberg) --New research shows that visiting the White House during the Obama years yielded a payoff in the stock price of the visitor's company. Will the same be true of the Trump years?
We may never know, because President Donald Trump has ended Barack Obama's practice of making the visitor log public.
The study, released late last month on the website of the National Bureau of Economic Research, found that the shares of companies whose top executives visited White House officials performed about 0.9 percentage point better than the overall stock market after the visits. The authors, Jeffrey Brown and Jiekun Huang, finance professors in the College of Business at the University of Illinois at Urbana-Champaign, say the stock-market lift occurred from 10 trading days before the meetings to 40 trading days after them. They reviewed 2,286 meetings between corporate executives and federal government officials at the White House from 2009 through 2015 , excluding meetings with 50 or more attendees, in which face time would presumably be limited.
"The evidence in our paper suggests that access to high-level officials in the executive branch can be an important source of competitive advantage for firms," they write. The paper, "All the President's Friends: Political Access and Firm Value," can be downloaded from the NBER site for $5.
As a test of their results, Brown and Huang looked at how the companies that benefited from access to the Obama White House did after Trump's surprise election. In the three days after the voting, the companies underperformed the overall market by about 0.8 percentage point, they found. That was all the time it took to see the difference the new president made.
A thorough study of Trump administration visits and corresponding stock performance would be impossible, because the president on April 14 closed the visitor logs to public inspection. At the time, White House Communications Director Mike Dubke cited “grave national security risks and privacy concerns.”
"We agree there are major risks associated with the documents’ release," Brown and Huang wrote in an article about their research that was published online by Politico Magazine on May 8. "Political ones."
Among corporate chieftains in Brown and Huang's study, the three most frequent White House visitors during the period were David Cote, then CEO of Honeywell International Inc., with 30 visits; Jeffrey Immelt, CEO of General Electric Co., with 22 visits; and Roger Altman, executive chairman of Evercore Partners, with 21 visits.
All three had things to discuss aside from their own businesses. Cote, who is now Honeywell's executive chairman, was appointed by Obama in 2010 to serve on a blue-ribbon deficit reduction commission. Immelt was chair of Obama's Council on Jobs and Competitiveness. And Altman was interviewed by Obama as a possible director of the National Economic Council.
Regardless of why they were there, it clearly doesn't hurt to get face time with the president or his top aides —which is why good-government types say it's important to know who gets into the White House.
"Trump is avoiding criticism about who visits him, and he’s avoiding scrutiny by voiding the voluntary disclosure policy," said John Wonderlich, executive director of the Sunlight Foundation, which favors public disclosure of government affairs. "This study tells us that the Obama administration did have deep ties with CEOs of top American companies," Wonderlich said. "The Trump administration is also going to have deep ties." According to the finance professors' research, the three people in the White House who were most visited were Valerie Jarrett, senior adviser to President Obama, with 107 visits; Jeffrey Zients, director of the Office of Management and Budget and later director of the National Economic Council, with 103 visits; and Obama himself, with 100 visits.
Kevin Lewis, a spokesman for the former president, said Obama had no immediate comment on the research. GE pointed out Immelt's White House appointment. Honeywell didn't have an immediate comment. Evercore declined to comment.
Brown, the co-author, is familiar with the White House, having served as a senior economist on President George W. Bush's Council of Economic Advisers in 2001 and 2002. He served on Bush's Social Security Advisory Board from 2006 to 2008.
The Obama administration voluntarily released logs of all White House visits except for personal family visits and sensitive personnel matters such as visits of potential Supreme Court nominees. Previous presidents had more restrictive disclosure policies.
To contact the author of this story: Peter Coy in New York at [email protected] To contact the editor responsible for this story: Peter Jeffrey at [email protected]