"I'm Not Selling Until Nancy Pelosi Does": A Look into the Market Activity of Congress Members, Marina Beshai, UG '22 (3962602)
Who is the average investor in Congress? How can we detect novel ways of detecting congressional insider trading? If retail investors were to copy congressional trades, would they also profit? Although the literature on members of Congress trading on the stock market is rich, these questions have gone unanswered since the passage of the STOCK Act of 2012. By analyzing the periodic transaction reports of Congress members from 2012 to 2021, results suggested that the average investor could either be male or female as they have the exact same rate of participation. That they are seven percent more likely to be Republican than Democrat. More so, they are more likely to be a Republican male than a Republican female in both the House and Senate. Paradoxically, they are more likely to be a Democrat female than a Democrat male in both the House and Senate. I also found that first-year and law-holding degree officials were more likely than their peers to engage with companies where they had oversight power. By modeling every single purchase transaction in the dataset, I also found that it is profitable to copy Congress members for short-term purchases but not profitable for long-term purchases. If investors planned on holding assets for roughly two years, profit increased by ten percent.