Capitol Gains - Examining Abnormal Returns in Congressional Trades During the Ukraine Invasion

Abstract

This study investigates if there are any abnormal returns on securities traded by the U.S. Congress members around the invasion of Ukraine on February 24, 2022. Using an event study methodology, the research examines trades made before and after the invasion, comparing Democrats and Republicans. The results show significant positive abnormal returns for Democrats and negative for the Republicans among purchases. Suggesting potential exploitation of non-public information for personal gain. Among the selling transactions the results show significant results for the Republicans only. A closer comparison between Democrats and Republicans shows a significant difference of 1% on the purchasing side and-0.3% on the selling side. This finding highlights information asymmetry in the market, with certain individuals possibly leveraging privileged information. Future research should extend the analysis to other events and longer periods to enhance understanding and robustness. This study underscores the need for ongoing investigations on the topic and potential regulatory measures to ensure market integrity and fairness.