The European Commission and the Revolving Door

Abstract Decisions of the EU Commission have important consequences for the corporate sector. Thus, the fact that scores of ex-Commissioners go through the revolving door to work for companies raises concerns. Many suspect companies of profiting from privileged access to information and key decision-makers. We assess whether companies do indeed profit from hiring ex-Commissioners. Based on a unique dataset of all Commissioners who served in the Commissions of Jacques Delors I to Jose Manuel Barroso II spanning over 29 years, we look at stock market responses to announcements of such hirings. We find positive abnormal returns, which implies that investors anticipate benefits to companies. The reactions are larger for hirings in the first two years after a former Commissioner left office, when connections and insider knowledge are still fresh.