The Value of the P2 Lodge Connections in the Italian Stock Market

This paper examines the value of connections between Italian industry and the P2 Lodge in the 1981. Drawing on previously unused contemporary sources about the board of directors of the corporations quoted in the Milan Stock Exchange Market and stock returns, we find that a significant proportion of the companies, especially in banking and financial sectors, had substantive links with the P2 Lodge at least until the end of 1981. Firms infiltrated by P2 members experienced unusually high returns between December 1980 and May 1981. These results are particularly evident for the banking and insurance cluster of firms and are robust to alternative estimators and definitions of affiliation.