Abstract

Authors: Séphane Benveniste, Renaud Coulomb, Marc Sangnier

Manifestations of prestige such as awards and titles are socially valued and are often sought for by individuals, yet measuring their economic value is complex. This paper quantifies the impact of state awards given to directors on their firms' stock value. We link a comprehensive dataset of recipients of the Légion d'honneur---the most prestigious official award in France---over the 1995--2019 period to board positions in French listed firms. We document large abnormal returns in the stocks of recipients' firms at award dates. We report indirect evidence suggesting that these awards are interpreted by traders as signals of connection to politicians in office rather than as public recognition of recipients' past performance, or as a government's communication channel about industrial policy.